About Conventional Acquisitions
The traditional path to property ownership.
A conventional acquisition is a standard real estate purchase in which Algonquian Real Estate enters into a purchase agreement, completes due diligence, secures the required capital or financing, satisfies closing conditions, and acquires title to the property.
This structure is appropriate when the property economics support traditional financing or available cash and the transaction can be completed without relying on alternative seller-financing or partnership structures.
The structure may be simple. The underwriting should not be.
Purchase price, rents, expenses, financing costs, repairs, reserves, title, insurance, physical condition, and operating requirements should still be reviewed before acquisition.
Purchase price, rents, expenses, financing costs, repairs, reserves, title, insurance, physical condition, and operating requirements should still be reviewed before acquisition.
How the Structure Works
A documented purchase from contract through closing.
Purchase agreement
The buyer and seller establish price, deposit, contingencies, deadlines, closing date, and other transaction terms.
The buyer and seller establish price, deposit, contingencies, deadlines, closing date, and other transaction terms.
Due diligence
Property condition, leases, income, expenses, title, insurance, zoning, environmental concerns, and other material matters are reviewed as applicable.
Property condition, leases, income, expenses, title, insurance, zoning, environmental concerns, and other material matters are reviewed as applicable.
Financing and capital
Cash, bank financing, commercial financing, or approved private capital may be assembled to complete the acquisition.
Cash, bank financing, commercial financing, or approved private capital may be assembled to complete the acquisition.
Closing and ownership
Required funds and documents are delivered, closing conditions are satisfied, and title transfers according to the final transaction documents.
Required funds and documents are delivered, closing conditions are satisfied, and title transfers according to the final transaction documents.
Conventional Financing
Financing is one component of the acquisition—not the investment thesis.
A lender may determine whether a transaction fits its credit standards. Algonquian Real Estate must separately determine whether the property fits its acquisition standards.
Debt service
Can property income reasonably support principal, interest, taxes, insurance, and operating obligations?
Can property income reasonably support principal, interest, taxes, insurance, and operating obligations?
Cash requirements
Down payment, closing costs, lender reserves, repairs, deposits, and operating reserves must be considered together.
Down payment, closing costs, lender reserves, repairs, deposits, and operating reserves must be considered together.
Loan conditions
Appraisal, insurance, entity documents, borrower guarantees, property condition, and lender underwriting may affect closing.
Appraisal, insurance, entity documents, borrower guarantees, property condition, and lender underwriting may affect closing.
When Conventional Acquisition Fits
Use the simplest structure when the economics support it.
Clear acquisition price
The agreed purchase price is supportable under the company’s underwriting assumptions.
The agreed purchase price is supportable under the company’s underwriting assumptions.
Financeable property condition
The asset is capable of satisfying the applicable lender, insurer, appraisal, and closing requirements.
The asset is capable of satisfying the applicable lender, insurer, appraisal, and closing requirements.
Available equity and reserves
The transaction does not consume the capital needed for repairs, vacancies, operating costs, or unexpected conditions.
The transaction does not consume the capital needed for repairs, vacancies, operating costs, or unexpected conditions.
Defensible operating plan
The property can be managed, maintained, financed, and operated within ARE’s actual capacity.
The property can be managed, maintained, financed, and operated within ARE’s actual capacity.