Investment Checklist

RE INVESTMENT CHECKLIST

The following are things to consider when deciding which real estate investment is best for you.

Capacity- Do you have what it takes to successfully complete this project?

* Time- Acquisition time, rehab time, marketing and/or sales time. What is the total time from beginning to end? Will you be able to monitor the project from inception to completion?
* Financing- Will the seller(s) accept cash or conventional mortgage? Is financing in place for this specific type of property? How quickly can you close with a lender in this type of deal? How quickly does the seller need to close?
* Rehab Crew- For properties needing menial to substantial rehab. Do you have a crew in place? When will they be able to begin, and when will the project be completed? How accurate are their cost estimates? How trustworthy are they?
* Rehab Costs- Do you have an itemized list (not an estimate) of what it will cost to rehab the property to your specifications? Do you have a cushion for overages and extra time needed to complete? Have you included soft costs such as sales/rental commission, monthly costs, permits, fees for attorneys, inspectors, etc?
* Product- Does this property meet your current investment goals? Do you have knowledge and expertise dealing with this type of product successfully?
* Flips – Will you purchase a property below market value, then return it to the market at a higher price within a short period of time?
* Conversions – Will you build new construction or rehab an existing structure? Are you in a new market? How long will it take to construct, market and close? Are there political policies that will inhibit or support your project? Is the market saturated? Will your product be competitive in this market?
* Rental- Do you know who would want to rent out a unit at this property? How much are the rents for that specific market area? Do you have a leasing plan? Who will manage the property and how? Will the cash flow generated be satisfactory for the trouble? How long will it take to stabilize your property? How much will it cost in evictions, bad debt and vacancies?
* Resale- Will there be equity in the property when you are ready to sell? How long will it take to sell that type of property? Who is the end user you have in mind for this type of product?
* Cashflow- Do you know your expenses for the property? How much will you net per month after expenses? How much will you make after rehab sale?

Exit Strategy – Who are the potential buyers for your property or land?

* Developer/Investors – Buying at a discount to resale or lots or rehabs for condo development
* Individuals - First time home buyers, some upward buyers, empty nesters

Market Knowledge

* Comparables – How are like properties priced, what is there market time?
* Hard and Soft Costs – Down payment, earnest money, rehab money, attorney fees, mortgage fees, monthly carrying costs, sales commissions and lease up cost. These costs are in addition to what you pay for the property.

Inspection – Some things don’t cost, they pay.

* What will it cost to repair property?
* What are the costs of unanticipated repairs?
* Is the property still worth purchasing knowing it’s condition?
* Attorney – You’ll get what you pay for, and you’ll need good legal advice
* Is your attorney knowledgeable about the specific type of property you are dealing with? If you are doing a condo conversion, are they experienced? How many conversions have they completed? If you are buying a new construction condo are they familiar with that type of contract and purchase?
* Do they return phone calls and documents in a timely manner?
* Were you referred to them by a person with a similar purchase or sale type?
* Financing
* Do you know what type of financing (if any) the property you are buying or selling will accept?
* Do you know what it will cost to purchase your property? Have you identified financing options for your property?
* Do you have a “Plan B” in case your “Plan A” doesn’t work?