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IFINDING HIDDEN VALUE IN AN INVESTMENT PROPERTY
By Sam Liebman
ntense competition in the current real estate discover whether it’s a sound investment, and think marketplace translates to great news for those outside of the box about where to find hidden value. who own properties but a tremendous obstacle To do so, prospective purchasers must ask, answer for prospective purchasers. Hypergrowth in the and analyze the following three questions: multifamily property market, which continues
to perform exceptionally well even in these challenging economic times, has created a feeding frenzy among investors.
Frankly, for every worthwhile property available, a waiting list of prospective purchasers are ready and willing to take on more risk for less reward than ever before. Yet when the fundamentals of real estate investing are compromised or no longer apply, then purchasing real estate becomes more akin to gambling than investing. Regardless of the intense competition, it’s critical to carry out an on-the-ground inquiry to avoid making a reckless decision. Now more than ever, you must find a way to uncover hidden value in a potential investment property that others pass by.
Take the time to find out what’s really behind the seller’s motivation to sell, use street knowledge to
WHAT IS IT?
If you were the acquisition manager for a real estate company, would you tell your boss that you believe a certain property is a good investment because it’s in a great location, it looks like it’s in great shape, rents are at below-market rates and it’s selling for only $50,000 per unit? If the answer is yes, you won’t last long at your job. Understanding what you’re purchasing requires extensive research, from performing diagnostic tests through third- party experts, to undertaking several on-the- ground investigative inquiries. Elect to have a property condition report prepared for you. Such reports generally render an opinion on the condition of various building components and systems. Never take the seller’s or the broker’s word for the property’s condition.
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74 FEBRUARY 2022 - APARTMENT MANAGEMENT MAGAZINE AMM2