#27 REAL ESTATE INVESTMENT Buyer Checklist You Need To Know Before You Spend Your Money. 60 Buyer-Beware Intelligence Points.

1. “Real estate always goes up” is not an investment strategy.
2. Leverage magnifies both gains and losses.
3. Cash flow projections can be manipulated by assumptions.
4. Appreciation is uncertain.
5. Location quality is more complicated than a popular neighborhood.
6. Population growth does not automatically mean investment success.
7. Rental demand can change.
8. New supply can reduce rents.
9. Property taxes can increase.
10. Insurance can become unexpectedly expensive.
11. Maintenance is unavoidable.
12. Major capital expenditures can arrive together.
13. Vacancy can destroy thin margins.
14. Property management can be harder than expected.
15. Tenant problems can consume time and money.
16. Transaction costs reduce returns.
17. Selling isn’t free.
18. Refinancing isn’t guaranteed.
19. Interest rates can change.
20. “Passive income” may require substantial management.
21. Partnerships create additional risks.
22. Syndications require serious due diligence.
23. Promised returns are not guaranteed returns.
24. Tax treatment can materially affect results.
25. Your investment thesis should survive a bad year—not just a spreadsheet showing a great year.

B. PREMIUM BUYER CHECKLIST

DEFINE THE STRATEGY

☐ Rental
☐ Fix-and-flip
☐ Development
☐ Land
☐ Commercial
☐ Short-term rental
☐ Syndication
☐ REIT/public exposure
☐ Other

UNDERWRITE THE ASSET

☐ Purchase price
☐ Comparable properties
☐ Current income
☐ Market income
☐ Vacancy
☐ Operating expenses
☐ Capital expenditures
☐ Taxes
☐ Insurance
☐ Management

UNDERWRITE THE MARKET

☐ Population
☐ Employment
☐ New construction
☐ Rental supply
☐ Rental demand
☐ Major employers
☐ Infrastructure
☐ Regulatory environment

UNDERWRITE THE FINANCING

☐ Loan-to-value
☐ Interest rate
☐ Term
☐ Amortization
☐ Refinancing assumptions
☐ Fees
☐ Guarantees
☐ Prepayment
☐ Default consequences

UNDERWRITE THE DOWNSIDE

☐ 10% lower income
☐ 20% vacancy
☐ Major repair
☐ Higher insurance
☐ Higher taxes
☐ Higher interest rate
☐ Lower property value
☐ Six-month vacancy
☐ Delayed sale

FINAL TEST

If the investment cannot survive reasonable downside assumptions, it is speculation disguised as an investment.