Twenty Questions to Ask about your Investment Property

  1. What physical improvements does the property need to attract and retain occupants? This year, next year, next five years? How will I pay for these essential repairs?
  2. Are the demographics changing in the property neighborhood? Are vacancies more evident? Is unemployment increasing?
  3. Are rental rates going up annually? Are expenses going up annually? Which is going up faster?
  4. Who is my direct competition? How does my rental compare to my competitors?
  5. From a prospects viewpoint, how does my leasing office, model unit, streetscape compare to my competition?
  6. How do my rentals compare to my competitors. What is the rental per square foot? From a prospects view, is my rental a better or worse value?
  7. What must I do to “keep up with the Joneses” and remain competitive?
  8. Can I increase my rental asking price or must I reduce my prices to remain competitive?
  9. How are my tenants doing? Is their business good, are they employed, are they stable, does their space look clean and neat?
  10. How can I increase other income? Can I increase ancillary income? Laundry, late fees, pet fees, parking fees, CAM pass thrus, utility reimbursements, cable TV, phone, tenant insurance, other ideas?
  11. How can I reduce my real estate taxes? Is the current assessed value higher than its true value. Should I apply for a value reassessment?
  12. Is my insurance costs too high? Should I get two more comparable bids? Do my tenants have insurance? What safety items can I add to reduce premiums? Should I demand my tenants to buy renters insurance to save on insurance costs?
  13. How can I reduce utility costs? Should I submeter for water, should I use high efficiency electric products, would I turn down my hot water temperatures and indoor temperatures in the common spaces? Should I get bids from suppliers of refuse, electric, gas and water? Should I buy and supply my own dumpsters? Should I reduce the trash pickup frequency?
  14. Is my site safe? Is it dark? Do I have good locks? Are safety lights out? Should I add more? Are doors left open? Are calls to 911 increasing in the neighborhood? Are there more vagrants, graffiti markings, prostitutes, loitering in the area?
  15. Should I do the routine repairs, lawn care, janitorial, management, accounting and other services in house or sub it out. Will this save money without curtailing service to occupants?
  16. Should I refinance to save interest? Is it worth it given the refinancing costs involved? How much can I borrow? Will this give me more cash flow? Ae there adverse conditions in the current or proposed new loan that hurt operations?
  17. How much can I realistically increase net income per year? How much will my property truly increase in value? How much will my cash flow be in the next few years given realistic projections of income, operating expense, vacancy and debt service?
  18. What is the yield on my equity this year? What is the after tax cash flow plus the principal reduction divided by the equity (Value less Debt)? Can I get a higher yield if I sold and reinvested the net equity into another property?
  19. Should I have a management firm manage my site? Would I earn more if the property were better managed?
  20. What improvements can I make to the property that would realistically be worthwhile and make the property more valuable?

These are just a few questions to do a self analysis of your real estate investment business. Your investment is a business and its return is usually a function equal to the degree to which you or someone else pays attention to the operation.

Tom Fortin

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