Buying real estate? It's not all price and cash flow...
Jeff Brown has a first-rate post about real estate investing and the various factors he considers when doing a deal. He reminds us that you cannot just look at the price and the cash flow and say "Sold!" This story is a must-read for the neophyte and a good reminder for even the experienced investor.
I would add one other thing to Jeff's list, if I could. Are there legal obstacles that might cause problems down the road? For instance, if the building is destroyed for some reason, can the property be rebuilt in at least the same size and use as it is now? (I'm thinking zoning or other land use changes, etc.) Are are there agreements, restrictive covenants or other binding obligations that could be trouble down the road? Stated more simply, sometimes the price is attractive for a reason that you cannot ascertain without careful due diligence.
I would add one other thing to Jeff's list, if I could. Are there legal obstacles that might cause problems down the road? For instance, if the building is destroyed for some reason, can the property be rebuilt in at least the same size and use as it is now? (I'm thinking zoning or other land use changes, etc.) Are are there agreements, restrictive covenants or other binding obligations that could be trouble down the road? Stated more simply, sometimes the price is attractive for a reason that you cannot ascertain without careful due diligence.
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