Page 107 - Trump University Commercial Real Estate 101

5

Locking in Y our Profit

The Letter of Intent

You have discovered how to attract deals and create key relation-
ships. You also know how to leverage your time and quickly fi nd the
nuggets among all the ore you ’ re sifting through. It ’ s time to start
making offers on the deals that make sense.
When we make an offer on a commercial deal, we use what ’ s called
a Letter of Intent . It ’ s also known as the LOI . This short document tells
the seller the terms under which you wish to purchase the deal.
Many beginning investors make a big mistake right here. They
think the purpose of doing due diligence is to end up making an offer.
In reality, the purpose of making an offer is to allow you the time and
access to information in order to perform effective due diligence.
When a broker approaches you on a deal, you have only the rough-
est numbers, as we saw in the last chapter. Now it ’ s time to get more
serious about the deal. There ’ s no point sinking lots of your time into

a deal, only to find out it was sold last week to someone else. The LOI
enables you and the seller to date seriously, so to speak, before you
sign the Purchase and Sale Agreement and get engaged.

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