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OUR DUE DILLIGENCE
NewLeafe principals have decades of experience in buying properties. The due diligence we do on them prior to purchase is all important. Buying existing, income producing properties is a much easier evaluation task than most new construction projects, business acquisitions, or marketing plans. Unlike those ventures, we have extensive due diligence checklists to assure that we are on the mark on our financial projections.
The more difficult part of our due diligence process involves the intangibles; what's happening in the area, the strength of the rental market, and the political risk. It is in assessing these issues that our experience becomes all important.
Regarding area analysis , we now have a surfeit of data available via the internet. We use that, of course, but we go beyond that and interview city planners, development authorities, and local business people.
Regarding the rental market, our task becomes easier. Because we are in the affordable housing sector, we know there is always excess demand. Nevertheless we digest the data, speak with local property managers and make our determination.
The political risk is perhaps the most difficult to assess. Real estate is subject to a myriad of regulations that can sometimes make life difficult. Municipalities are constantly enacting new ordinances and rules. This is one of the reasons we prefer the American Southeast, where affordable housing and mobile home parks flourish and are a very accepted housing alternative. We judge the risk by speaking with the authorities who regulate us. We not only find out what the current situation is, but we determine their attitudes toward future development. The political risk is, in our case, the most difficult to assess, but it is also one of the major factors that contributes to our success. For instance, in the case of nearly all of our mobile home parks, it would be extremely difficult, if not impossible, for anyone to build a new one nearby. We are "grandfathered in" to an existing monopoly in most of our locations.
All of these factors are taken into account before we close on a purchase. In this phenomenal "buyers market" a property must excel on all factors to make it through our due diligence process.