Acquiring distressed assets is nearly a separate skill due to the different motivations of all parties, the impacts to the physical plant, the financial concerns of a possibly insolvent seller, and all of these items to be conducted on an extremely abbreviated timeline.

When a seller starts to face a liquidity shortfall, they will often forgo routine maintenance as a start. When larger shortfalls continue to persist, they may reduce staff, cut essential vendors and defer regular owed payments. Eventually, these late payments will reach the debt lender who can force a sale.

Depending on the severity of the cash flow issues, these impacts may occur in 2-3 months or may stretch over a period of years. The end result is always the same: a deteriorating building with significant deferred expenses and a lender pushing a sale to protect their interest.

As a potential distressed asset buyer, you should prepare your team to act quickly and decisively. At a minimum, we suggest the following:

  • Entity Formation (LLC)
  • Letter of Intent
  • Financial Commitments
  • Vendors
  • Inspections
  • Survey
  • Legal
  • Accounting

You must decide who will be the “quarterback” of this operation because delays of 2-3 days can cause missed deadlines and lost funds. The team at Ronald Rohde Law can play as large or as little a role as you need.

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Ron helped me structure our development business, LLC formation for each property real estate deal

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Over 3,000 clients served

Ron has helped developers raise foreign investment funds through the EB5 program and represented foreign investors from China, Hong Kong, United Kingdom, and India.

Over $1 billion of real estate transactions

Ron has conducted acquisitions of commercial real estate, new construction development, and all areas of asset management for shopping centers, retail strip malls, restaurants, office buildings, industrial and warehouse assets.

Ron has helped thousands of investors on BiggerPockets where he a leading expert on real estate investing.

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