VOL. 129 | NO. 102 | Monday, May 26, 2014
Take Proper Steps Before Investing
CATHY ANDERSON | Special to The Daily News
So you want to buy or sell an investment property?
I hear these words more often than you would think; sometimes from a client I know, sometimes a referral or other “new voice on the phone.”
And, generally, after a few minutes of discussion I’m usually able to piece together a good bit of information about the motivation for someone seeking to purchase an investment property.
Was there an unexpected windfall? Do we need to consider a 1031 Exchange? Do you have a price point for the investment and have you already arranged financing? What sort of return do you expect with this investment?
These are only a few of the questions posed to my new “investor” so that I can fully understand their needs and represent them in their search for the ideal property. These are the good calls.
However, I continue to be surprised at how quickly others will jump into an investment property without the proper due diligence. How do I know this? Because more often than not, I get the call after the investment is done, after the previously 100 percent leased property is now 25 percent leased and after the client is “upside down” in the property and the bank is breathing down his neck. These are the not-so-good calls.
What went wrong?
It doesn’t take long to piece together the steps in this scenario. Mr. or Ms. Investor heard from a friend, read it in an article, or got the idea that investing in real estate was financially rewarding and simple, something easier and safer than investing in the stock market.
Perhaps they were lucky enough to stumble upon a deal that was “too good to pass up.” In this scenario I always ask the questions gently. Did you gather estoppel letters from the tenants? Did you review the leases prior to the end of due diligence? Are there personal guaranties for the leases? Were you able to review any tax returns for the property prior to your purchase? These questions are often met with awkward silences. It’s the, “Hello? Is anyone out there?” bit you hear on Comedy Central.
Working with a professional Realtor with the Certified Commercial Investment Member designation ensures that you are partnering with a professional who has the credentials and expertise shared by only the top 2 percent of commercial Realtors in the U.S.
We can assist with an in-depth market analysis, financial analysis of the cash flows and we are required by law to adhere to a strict code of ethics. We have the tools and the experience to guide the “I want to buy or sell an investment property” through the process with a positive outcome. The CCIM’s goal is a successful transaction for the buyer or seller, not just a transaction.
Cathy Anderson, CCIM, is a commercial real estate broker specializing in investment sales in the Mid-South region. She is vice president of the Memphis Metro CCIM Chapter and sits on the board of directors for the MAAR Commercial Council.