Janovetz Realty Advisors - Investment Criteria

Many buyers have a basic perception of what they need as it relates to the amount of money that they are able to invest. What risks are buyers willing to take to achieve a certain level of potential gain or income stream? How much time can buyers afford to spend in obtaining an investment and how long should they hold a real estate investment?

For sellers, change the perception to how much money, time, and risk do sellers have invested in a property. What amount of money are sellers willing to accept to achieve a certain level of gain? How much time can sellers wait from the time they decide to sell the asset to obtain the proceeds from the disposition? What risks are inherent in selling real estate?

Have you defined your investment goals? JRA suggests that you answer the following preliminary questions and that you write down the questions and your answers. Discuss these questions and your answers with your real estate attorney and financial advisor. Develop your investment goals and plan your acquisition or disposition strategy. JRA will help you locate a property matching your acquisition criteria or help you sell your existing real estate investments based upon your disposition plan.

Buyers:

1. What are your short-term and long-term investment goals? Where do you want to be financially 10 years from now?

2. Have you invested in real estate before? Is this a 1031 exchange? Do you know the IRS requirements for a 1031 exchange?

3. How much of a monetary cushion do you have? How much should you have?

4. How many risks are you willing to accept? What kind of risks?

5. How long do you intend on holding the investment? Do you have a defined disposition plan? Are you going to be able to postpone capital gains taxes?

6. Do you prefer appreciation or do you need an income stream?

7. Do you need active or passive investments? Do you need a property manager?

8. If you were the seller of the property that you are buying, could you sell it?

9. In what areas would you consider investing? What should the demographics look like? If the tenant goes bankrupt, could you re-lease the property?

10. What types of real estate are you considering? Do you know the levels of risk for that property type? What property type has the least amount of risk?

11. How much financing will you need? Is financing available for the type of real estate you are seeking? What is the loan-to-value? How does the loan term and amortization period affect the amount of money that you put in your pocket?

12. Do you know what your credit report says? Do you know your credit grade?

Sellers:

1. What are your short-term and long-term investment goals?

2. Have you sold any real estate before? Will this be a 1031 exchange? How much time do you have to find a replacement property?

3. Is your property in its best condition to be put on the market now? Could it be better? Does the property need repairs or a new roof?

4. Is the property fully leased? To credit tenants? Local tenants? For how long? Are your tenants paying rent at or below market? Are they staying or leaving?

5. Is there any non-prepayable debt on the real estate? What interest rate? Fully amortizing? Can a cash buyer buy your property?

6. Do you have an appraisal? A phase one environmental report? A survey? A termite report? Do you have property financial statements for 24 months?

7. What are the demographics of the area surrounding your real estate? What are the average household incomes of the neighborhood? How much traffic is there?

8. If you were the buyer looking at your property, would you buy it?

9. Is there any deferred maintenance on the real estate? What are the ages of the buildings? Do you have a warranty for the roof membrane?

10. What price do you expect from the sale of the real estate? Would the buyer's appraisal support that price?

11. What closing costs are you willing to pay to make the deal? Commissions? Who pays transfer taxes at closing? Who pays your lender's attorney?

12. What does the intermediary do?

13. What are the tax effects of selling the real estate? What is your tax basis?