'ABC's of Investment Property'

Getting off on the right foot for investing in Investment Property requires due diligence and help from qualified real estate professionals. Don’t Over Pay – over paying by as little as 10% has unrecoverable consequences. • Not getting a property “valuation” from a qualified Principal Real Estate Broker before you make an offer. • Not knowing the cost to run the property: calculating the s/f NNN costs plus utilities for the property whether you pay these expenses or not. • Not determining your cash flow requirements for the property before you make an offer. • Not performing a 10-year financial analysis of the property: incomes, expenses, taxes (property & personal), utilities, reserves, etc. before you make an offer. • Not developing a business plan for each property you own. • Not having a quality lease drawn up by a real estate attorney. • Not having a qualified and licensed building inspector or structural engineer inspect the property before you close on the transaction. • Not having enough down payment money. • Not having enough reserve funds for unexpected vacancies, repairs, tax increases, insurance, etc. • Not requiring tenant to carry sufficient insurance to protect your property and the property of other tenants. • Not requiring tenant to include your company as “additionally insured” on their insurance policy. • Not inserting a minimum yearly rent increase for inflation (CPI) in the lease agreement and then Not Collecting the increase from the tenants. • Not collecting a security deposit from tenant. Minimum of one month’s rent. • Not hiring a full-time commercial real estate company to advertise and lease your property. • Not maintaining the property and loosing the appreciation amount you expect when you sell. • Not hiring a cleaning company to maintain common areas of building. • Not allowing tenants to make below standard repairs to the building’s mechanicals; plumbing, electrical, a/c, furnace, etc. on NNN leases. Keep Control. • Not having a list of qualified vendors before a repair or emergency. • Not getting too close or personal with your tenants. Maintain a professional arms length relationship.

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