When it comes to investing in real properties, it is important to have and appreciate the market and value discussion but more importantly, the numbers. At the end of the day, any property must be in a place where people want to be, with acquisition costs that allow for a cash return, and have a predictable overall return on the investment over time.

We start with a Fully Qualified Investor Property Profile which we offer as a service to placed investors. Included in this Qualified Investors Property Profile is 99% of everything you need to know before making a tentative decision on a property. Why 99%? Because there’s always something that could be behind the walls (physical or legal) that you can’t see or know about and every property has something in their history. So review and evaluation of the Title and provenance is crucial to the overall process. Once it is decided that a property is a good candidate we perform the due diligence including any necessary inspections and document searches to get to 100%. Here’s some of the information we include beyond what you might get in an MLS listing, property disclosure or inexperienced real estate agent:

• Purchase Criteria Analysis
• Asking Price
• Best Price
• Buy & Hold Projections
• Actual Cap Rate
• Real Purchase Costs & Total Cash Needed
• Price Per Unit (if Multi)
• Returns & Ratios including: Cash-on-Cash, ROI, ROE, IRR, RTV, GRM, DCR
• Financial Projections (Year-1 and 5-Year increments to Loan Term)
• Assumptions including: Vacancy, Rent Collection Frequency, Appreciation, Income Increase, Expense Increase, Selling Costs
• Financing Based on Loan Type (Monthly & Annually)
• Itemized Rehab Costs
• Itemized Expenses including: Property Taxes, Insurance, Maintenance, Management, etc.
• Professional Commentary on Moving Elements of the Investment
• Pictures

Cash investments keep the numbers simple yet there are benefits to financing.

Commercial properties are completely different than residential in terms of analysis. However, the numbers still have to work. Liquidity of commercial property is usually much lower than residential because of their inherent specialized purpose. Commercial properties should be considered long-term investments for this reason. Commercial lending is generally easier to get than residential because there are no standards for how a lender can evaluate towards underwriting and the value is in its ability to generate a return. In our case, we make recommendations for specific types of commercial properties based on long-term stability and rate of return.

As a primary investor, our holdings are specially picked for either their cash flow, equity or market potential (upside/growth). Of course we have many other factors that we consider but it all starts with the financials and stability in the return. If a property is intended to be leased with an option, the acquisition costs are often lower because of how we structure the investment and market it to a potential Lease/Option tenant. For lease-only investments we make every effort to improve that property to raise the standards at the lowest cost but with the highest perception in value-add. We’ve achieved and it is not uncommon to gain 30% higher rent rates from our renovations. Likewise with the increase in standards and features, we inherently increase the overall value of the property for either ongoing rental purposes or sale to owner-occupants.

Some features we look at when considering acquisitions for renovations are:

• The “bones” (foundation, plumbing, heating, electrical and roof)
• Kitchen (including appliances, lighting, cabinetry & trim)
• Baths (number and condition)
• Internet-Readiness & WiFi Zoning
• Facilities Management
• Community Security Profile
• What to Update or Leave to Tenancy
• High Value Feature to Cost Elements
• and Much, Much More…

An upside to every leased property is our ability to include benefits that are lowest in cost but highest in value to long-term tenancy.

We make improvements in the right places of a property to maximize livability, appraisal value and appreciation. Below are some pictures of recent renovations of a residential townhome in Harrisburg, PA.