Out Of State Investors

5 Replies

To all the OOS REI!

What do you expect to see in a potential investment deal when presented with a new investment packet from someone you are not familiar with?

Regardless of OOS, I want to see that someone knows what they are talking about, and they did some due diligence already.

For instance:

If you want me to invest in your MF property, I expect to see the OM with basic structure info, pictures, unit mix, financial Pro Forma, renovation information (w/roof age), construction details, utility specifics, HVAC details, flood zone, purchase price and date, comps, etc. I also want a audited T-12 P&L and a detailed RR with details by unit and over time (so I can see which unit was vacant for which month). If you have area demographics for job growth, household occupancy, household income, etc, that makes it all that much better.

If it's commercial office space, then I want a lot more details about the building: type of roof and last replacement, size, age, location and number of A/C units and specifics about the parking lot. I want to know the name and type of business for each tenant, how many square feet they lease and where their unit is located in the building (shown on floor plan). I also want details on their leases as well as the average $ per sq. ft lease rate for the building. I want to know which walls are load bearing, if it has drop ceiling, and whether it is concrete, wood framed or steel studs. Is there fiber in the building (or to the building) and is there a fire suppression system. How many elevators (if any)? How many bathrooms, and where are they located? ADA compliant? Automatic lights? Exterior lighting?

A pet peeve of mine is when I see financial analysis info that does not include property management in their NOI, and THEN a cap rate is given using that incorrect NOI. Don't do that...

You have to remember that every investor looks for something different in the data on the deals they evaluate. Present the data, and let the investor decide whether it works for him or her. One presentation can easily be given to as many people as you want, so if one investor says no, it does not take any more work to send your presentation to another investor.

I would want to know the exit strategies and how the investment is secured (first lien?).  Since this is out of state, find out who is the on-ground team that will be managing the deal.

Originally posted by @Thayer Hood :

Thank you @Steve Hall , this is the exact information I am looking for. I appreciate you covering all aspects of investing as well, not just MF properties!

 Indianapolis is a very interesting market to me, low crime, low prices and high rents 

@Steve Hall I think this is a good list, but owning a wholesale operation in Indy, as well as owning a handful of commercial buildings, leads me to be the devil’s advocate:

In many situations, this detailed information is not available. What should investors be looking for, on a base level, for a SFH as well as multi family? There are many times that a mom and pop owner won't have audited T12 or roof age or utility metering specifics available. How would you expect someone offering that property to you to present it?

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