One of the best examples of why I believe in independent due diligence involved a large ocean marina in Florida.
I was hired to perform due diligence for a prospective buyer. On the surface, the property was spectacular. If you simply visited the marina, walked the docks and looked at the location, there was little reason to suspect a serious problem.
But due diligence is about discovering what you cannot see during a property tour.
What the Property Tour Didn’t Show
The marina was located next to a bridge in an area where the current could become extremely strong. As I dug deeper, I learned that the conditions had previously contributed to damage involving very expensive boats.
That discovery led to something far more important: there were restrictions affecting docking in that area.
Why Usable Slips Matter When Buying a Marina
Think about what that means to a buyer.
When you purchase a marina, the number of usable slips directly affects the economics of the property. A buyer could underwrite the acquisition assuming that every apparent slip can generate revenue, only to discover after closing that some of that inventory cannot be used as expected.
That isn’t a cosmetic problem. It can change the income of the marina, its value and potentially the economics of the entire acquisition.
What made the situation even more remarkable was that the seller was itself a major insurance company. Yet this issue was not something my client had been told about at the beginning of the transaction.
The marina was initially being discussed at approximately $20 million. It ultimately sold for substantially less.
What Due Diligence Is Really For
I use this example because an appraisal, environmental report, physical inspection and review of insurance history aren’t paperwork designed to make a closing more complicated. Each one answers a different question.
And sometimes the most important question isn’t whether the marina looks good.
It’s whether everything you’re paying for can actually be used the way you think it can.
At A&J Gulf Blvd Capital, we bring this same independent approach to marina financing and marina acquisition due diligence.
A&J Gulf Blvd Capital
Commercial Real Estate Financing | Marina Financing
ajgulfblvdcapital.com