Property Due Diligence Process: Pre-LOI Checklist for Investors

By Endrina Marchena, Property Sourcing Lead at CommercialGRP

One of my favorite parts of sourcing properties is the moment when a deal moves from “interesting” to “worth digging into.” That transition takes curiosity, collaboration, and a disciplined evaluation process — especially before submitting a Letter of Intent (LOI). In today’s competitive environment, the investors and brokers who take the time to understand a property before they advance the conversation consistently outperform those who skip early steps.

At CommercialGRP, our sourcing and acquisitions work is rooted in our Core Values: staying motivated and committed to finding high-value opportunities, communicating clearly with our partners, relying on strong analytical processes, and operating with honesty and integrity at every step. The pre-LOI stage is where those values matter most.

Below is the checklist I use daily when evaluating industrial (15K–120K SF) and select retail properties across our target markets. Whether you’re an investor or a broker, having a clear pre-LOI framework ensures cleaner negotiations, stronger underwriting, and — most importantly — fair deals that uplift communities.

1. Confirm the Property Fits the Buy Box (Before Anything Else)

A property can be attractive, but that doesn’t mean it aligns with your investment strategy. Before reviewing any deep details, I confirm:

  • Size: 15,000–120,000 SF industrial (or targeted retail)

  • Location: within growing or stable industrial/retail corridors

  • Site functionality: parking, loading, circulation, and access

  • Potential value creation: rents, market demand, or improvements

Starting with alignment saves time for everyone — brokers, sellers, and your own team.

2. Evaluate Tenant and Market Fundamentals

Before an LOI, I take a practical but thorough look at the tenant and the market around the property:

  • Who’s the current tenant?

  • What does their business do, and how stable is their industry?

  • How long have they occupied the building?

  • Are rents at, below, or above market?

  • What’s the recent absorption and demand in the immediate submarket?

Markets like PA, MA, RI, and CT move differently, and understanding local dynamics early helps investors avoid surprises.

3. Conduct an Initial Physical and Site Assessment

You don’t need a full inspection at this stage — just the essentials:

  • Roof age and condition

  • Parking and trailer storage

  • Loading docks vs. drive-ins

  • Sprinkler type (ESFR vs. standard)

  • Clear height

  • Utility capacity

Even a property with challenges may still be a great deal if the fundamentals support it. But knowing the issues early allows for honest, transparent conversations with brokers and sellers. That’s where communication builds trust — not surprises during escrow.

4. Identify Value-Add or Stabilization Pathways

Some of the strongest deals I’ve sourced looked “ordinary” at first. The key is recognizing hidden potential. Before an LOI, I look for:

  • Undermarket rents

  • Expired or rolling leases

  • Functional upgrades that improve tenant demand

  • Zoning flexibility

  • Opportunities for multi-tenant conversion

If the property has a clear path to improving cash flow or supporting a community need, that’s when it becomes truly compelling

5. Validate Pricing Expectations

Transparency is essential here. Before preparing an LOI, it’s better to align early on:

  • Seller expectations

     

  • Market comps

     

  • Cap rates for the submarket

     

  • Recent lease comps

     

  • Renovation budgets

     

Fair acquisitions come from honest conversations — and that honesty creates long-term relationships with brokers and investors. When everyone understands the numbers from the start, due diligence moves faster and cleaner.

6. Confirm That the Deal Supports Community Impact

This part matters to me deeply. At CommercialGRP, our purpose is to transform communities and improve lives. That means asking:

  • Does this property serve local businesses?

  • Will improvements support jobs or local services?

  • Is there an opportunity to revitalize an overlooked asset?

When a deal adds value to more than just the balance sheet, it becomes the kind of property we’re proud to acquire.

7. Prepare Clean, Clear, and Collaborative LOI Terms

When the data aligns and the opportunity checks out, I help prepare terms that are:

  • Clear

  • Fair

  • Responsive to the seller’s needs

  • Representative of the property’s true value

Clean LOIs build smoother escrows — and stronger relationships.

Let’s Find Your Next Deal Together

If you’re a broker with an active listing or off-market opportunity — or an investor exploring industrial or retail acquisitions — I’d love to connect. My role is to identify high-potential properties and guide partners through a transparent, detail-oriented evaluation process.

If you have a deal that may fit our buy box or want help assessing an opportunity, let’s talk. I’m always happy to collaborate.