What is an LOI in Real Estate? Is an LOI binding or non-binding? What’s in a letter of intent (LOI)? Why is this document SO important?
This video will walk you through an (LOI) letter of intent, in relation to multifamily real estate.
What is LOI in real estate?
LOI is a real estate acronym that you may come across within the commercial real estate industry. In Real Estate the LOI stands for the “Letter of Intent”.
Commercial real estate investors use an LOI when making an offer on a real estate property.
The purpose of writing a real estate LOI is not only to let the asset owner know that you are interested with the property, but to let it be a bridge to let the owner know what you can offer without having to state every detail of the transaction.
A letter of intent (LOI) can be as simple as a single to a 2-page document.
In real estate, the LOI does not have to contain all of the details of the transaction. This will be discussed within your purchase and sale agreement (PSA).
Real estate LOI’s are not legally binding contracts. Some advantages of using LOI, and why successful investors use it, is that you can’t be bound and allowing you to make offers on properties without any hindrances.
You can show your interest within a letter of intent to multiple properties without a huge cash outlay.
If you increase the frequency of your LOI’s submissions this will improve your chance of getting more deals under contract!
We hope this article provided you clarity on the letter of intent and how it is used in real estate.
If you are interested in multifamily investing please visit Disrupt Equity’s investment page here. On this page, you can go through our investor’s Frequently Asked Questions as well as submit a form to be notified of our upcoming investment opportunities!