A LOI is typically used as a "starting place" for negotiations on a property. Generally a LOI will be followed up by a formal Purchase Agreement after the terms are settled on. This may or may not be the case in your area, but is a good use of the two documents.
One of the most important things you can build into these documents is a clause that allows you to perform proper "due diligence" on the property. Basically you want to make sure that you have time to review all of the necessary financial information, management documents, and fully inspect the property itself BEFORE you finalize the purchase of the property. If things are not what they appear to be on the surface, it is better to find out now _ before you own the property than 6 months down the road.