Not for Everyone!
For a novice, and sometimes even for a relatively experienced investor, conducting due diligence on any investment can be an intimidating prospect.

Properties are akin to a three- dimensional puzzle where the pieces are constantly changing in estimated values especially in a volatile market.  The price yesterday is not what it is today and no one knows where it will be tomorrow.

While investment properties may require more strategic planning than other asset types such as buying a residential property, it is still a highly manageable task especially if you have an expert to help guide you along.  And when I say Expert, that does not qualify all realtors.  Few have the knowledge or experience that is required.

Investment buying is not for the faint at heart.  It is volatile and can be risky just like any other investment.  But one thing about real estate is this; it always goes up over time.  That safe zone increase in property value can be within 6 months or one year or not until five years or longer.  The question being can you last that long? Smart investors treat real estate holdings as long term not the opposite.

Investment Properties need attention to detail

1. Conduct a desktop analysis – search out data on properties similar to your choice.
2. Perform a field evaluation of the site.
3. Review potential leases and create a stacking plan. (future opportunities, threats to occupancy, unforeseen expenses, contingency plan, vacancy rate)
4. Assess any existing tenants.
5. Understand the target market.
6. Investigate the competitive leases in the area.
7. Know the municipality and its bylaws (parking, fire code, occupancy etc.)
8. Consider the impact of the tenant experience. (Are you up to the task)
9. Evaluate the Covid-19 factor (any other potential threat-flooding, construction etc.)
10. Location-evaluate the neighbourhood, highway access, visibility of the property.
11. Physical condition (Roof, Structural Integrity, Environmental Assessment)
12. Growth trends for the area (Growing roadways can affect values up or down)

You should have some intention and clear understanding of your strategy.  The type of investment and its purpose, direction and where you are trying to go.  Is there an exit strategy for less exposure.
 
 Due diligence is at the forefront not after.  It is all about minimizing the risk.
1. Study vacancy rates
2. Construction of new properties become competitors all vying for the best tenant.
3. General economic trends in the market, major employers in the area.
4.  Know operating costs and be mindful of volatility, meaning; is the vacancy rate moving around a lot.
5. Investigate all operating systems, alarms, HVAC systems, roof, façade, fire suppression systems electrical up to code. Water and lighting should ideally be modern and efficient and up to code, Bathroom upgrades and sufficient Parking as well as access to public transportation

Apartment buildings open up a whole other list, elevators lobby entrance, lobby appearance lighting in the underground etc.

Whether a single-family home, tri-plex, 4 plex or 60 unit Apartment building, the due diligence is the same.  The larger the Investment, the greater the Risk!
 
Generally, Investment Properties are Tenant Occupied.  Learning how to select the right tenant is a real skill.  It is the difference between success or failure!

Higher credit ratings and personal guarantees minimize risk of defaults and terminations and enhance your ability to obtain good financing terms with banks.

Banks look at the three C’s – Credit, Collateral, Capacity to repay (tenant payment history)

Second Step – Know the Landlord and Tenant Act!

First Step is to get the right advice from an Agent who Knows!

KNOWLEDGE
You must develop the faculty of seeing with your mind’s eye, seeing concisely & exactly what you imagine, determine what specific goals you want to achieve and develop a plan for achieving those goals and a deadline for it attainment.  Then you have to put theory into practice, turning knowledge into know how and thought into action.

Contact our Brokerage and we will put you in touch with one of our Investment Agents.