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Letter of Intent | International Residential Real Estate Investors Association
Monday January 22nd 2018

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Letter of Intent

The purpose of a letter of intent (LOI) is to agree to the major business terms of a project under the idea that such an agreement does not require significant legal intervention and can save time and money  for both  parties.  If complete enough, a letter of intent may  even serve to allow initial due diligence on an investment purchase.  This can be considered an even greater savings sense you may  have the opportunity  to more thoroughly  examine an opportunity and without additional commitment pull out if necessary.

The key components of a letter intent are:

  1. The purchasing entity,
  2. The  selling entity,
  3. The purchase price,
  4. Optionally, expected loan terms if any either from the seller or an outside lender,
  5. The period of  review and due diligence under the letter of intent,
  6. Types of reports and studies you will be completing prior to purchase,
  7. Required property materials from the seller,
  8. Required closing support materials from the purchaser,
  9. The projected due date to offer a proposed sales contract,
  10. The projected due date of a projected closing,
  11. A statement clearly  stating that the document is a non-binding letter of intent that is not part of the sales contract or final sales terms as defined in the sales contract.

Often an LOI will offer some background on the purchaser and references to ease the seller’s mind regarding the legitimacy of the purchaser and their capacity to close the deal should a formal contract be entered.

Free members will have access to my Letter of Intent outline which provides more specific statements the letter will use and more detail of materials a purchaser might request.  Paid members will have access a Letter of Intent template later this week which will define in detail the specifics a purchaser will want to use.  While every deal is specific and every organization is unique these tools should allow almost anyone to complete an effective LOI.

The investor should expect that the LOI will allow an attorney to develop an effective sales contract with relatively limited time thus saving legal involvement in the initial stage of the deal and saving significant legal cost developing the contract.

Blake Ratcliff

The Real Estate Investor

“The IRREIA - Making residential real estate investing more fun and rewarding
through better education, tools, information, and networking!”


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