Once you feel that you located an investment property worth pursuing, prudent real estate investing procedure also require you to find out several things about the property in addition to the analysis of income and expenses. Of course, the bottom line, i.e. cash flow and profitability, are the most essential, but these eight items can impact an income property’s cash flow and profitability.

1. Age of the Property

Older rental property can mean repairs or appliance replacement expenses may be expected in the near future and should be taken into consideration in the price you are willing to pay for the property.

2. Rental History

Has the property enjoyed a high occupancy level over the past few years? What happened to its occupancy or rent level during the period of economic slowdown?

3. Neighborhood

What kind of properties surround the building you are considering acquiring? Is the rental income property you want to purchase the only well-kept building on the street? Remember, renting apartments in deteriorating areas can be difficult and often lead to climbing vacancies.

4. Building Condition

You must never purchase real estate investment property without considering the physical condition of the building. Your contract to purchase must give you the option of having a roof and termite inspection made by a licensed inspector. Be sure to do a walkthrough of all the apartments. Are they well maintained? This will not only tell you what repairs you may be facing, but will also give you an indication of the type of tenants that are renting the apartments.

5. Lot and Building Sizes

Along with the present zoning on the property, the lot and building size of the property gives you an indication as to whether or not the property is being put to highest and best use. Can you add additional rental units on the property at some future date?

6. Amenities

Amenities affect how your property can compete with other rentals in the area. Bear in mind, however, that major amenities such as tennis courts and swimming pools generally cannot be justified on smaller complexes.

7. Parking

Be sure that the investment property provides at least one parking space for each apartment plus a proportionate number of guest parking spaces (one and one-half to two parking spaces per unit are desirable). Check local zoning codes. If the apartment doesn’t provide adequate parking, you better reconsider your purchase.

8. Other

Some of the other considerations include sewers, property access, proximity to bus stops and shopping. Is the property serviced by sewers that are connected and are all assessments paid for? Can the property be accessed easily; does it have easy access to freeways and major highways and byways? Are there adequate shopping facilities nearby?

As stated, these basic details concerning the property you want to purchase will add to your evaluation of the investment. There are not directly related to the income and operating expenses that contribute to the bottom line, but they will influence the bottom line, and therefore real estate investors would be wise to consider them when purchasing any investment real estate.

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