BFI - Basis for Interest Document
Key points:
Property information
Owner / seller and financial structure (REO / non-REO)
Acquisition cost (proposed offer)
Estimated cost to carry, improve & sell
Proposed exit strategy
Time period from acquisition to exit and/or return of capital
Revenue prediction at sale
Gross profit / margin estimates.
Valuation method:
- General criteria include
acquisition below current and trailing market values
acquisition below replacement cost (for vertical projects)
Value Add
- An understanding and definition of how we are increasing value
Administrative (zoning, repositioning, etc.)
Strategic (individual versus bulk sales)
Physical (complete build-out, renovate, repair)
Financial (cash infusion, marketing, adjust price point)
Exit Strategy
- A defined time frame for the proposed exit as backed by market data