Episode 46: The LOI to Closing Process

Building Passive Income

00:00 / 00:13:54

Welcome to Building Passive Income with CREI Collin.

The LOI to closing process is one of the most critical phases in any commercial real estate investment—and one of the most misunderstood.

In this episode, CREI Collin breaks down exactly what happens from signing a Letter of Intent (LOI) through due diligence and closing. You’ll learn how to evaluate the deal, verify the numbers, and protect your capital before you commit.

If you want to move from reviewing deals to confidently executing them, this episode gives you the roadmap.

In This Episode, You’ll Learn:

• What a Letter of Intent (LOI) is and what it should include

• The step-by-step process from LOI acceptance to closing

• What the due diligence period is and why it matters

• The difference between financial and physical due diligence

• How to verify everything the seller provides

• When you can walk away without losing earnest money

• Common due diligence mistakes and how to avoid them

• What checklists to follow before closing

Key Topics Covered:

[00:00] Introduction – Why the LOI to closing process matters

[01:30] What Is a Letter of Intent (LOI)?

[03:15] The Steps from LOI Acceptance to Closing

[05:00] Understanding the Due Diligence Period

[06:45] Financial Due Diligence – What to Review

[08:30] Physical Due Diligence – What to Inspect

[10:00] Common Mistakes to Avoid

[11:30] Recap and Next Episode

Key Takeaways: LOI to Closing Process

Understand the LOI

✅ The LOI outlines the key deal terms including purchase price, earnest money (typically 1–3%), due diligence timeline, financing, and closing date

✅ It sets expectations before moving into a binding contract

Use Due Diligence as Your Protection

✅ The due diligence period allows you to inspect and verify all aspects of the deal

✅ You can renegotiate, move forward, or walk away based on what you uncover

Know the Two Types of Due Diligence

✅ Financial due diligence verifies income, expenses, leases, and historical performance

✅ Physical due diligence evaluates the condition of the property and major systems

Verify Everything

✅ Compare rent rolls to leases

✅ Compare operating statements to tax returns

✅ Compare projections to historical performance

Don’t Rush the Process

❌ Rushing due diligence increases risk

✅ Use the full timeline and request extensions if needed

Build the Right Team

✅ Work with inspectors, attorneys, and CPAs

✅ Professionals help identify issues you may not see

Go In With a Plan

✅ Before closing, confirm how you will increase income or improve operations

✅ A clear business plan reduces execution risk

Resources Mentioned:

• Due diligence checklist (financial, physical, legal)

• Typical LOI terms and timelines

• Key professionals to involve during due diligence

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Disclaimer:

This podcast is for educational purposes only and does not constitute legal, tax, or investment advice. Always consult qualified professionals before making decisions.