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What to consider when touring a CRE property

Some investors like to tour the physical asset or property as part of their own due diligence process when considering a potential CRE investment opportunity. If this is something that interests you, and you either live in the vicinity of the subject property or plan to visit, feel free to reach out to the sponsor of the offering to request a site tour. You can do this using the “Questions?” feature located in the right-hand sidebar of that particular offerings’ detail page.

Below are a few general considerations to keep in mind if touring a CRE asset or property: 

  1. Visually inspect the exterior of the building. Look for any issues with the landscaping and physical asset itself. This can be helpful because you will be able to tell if the building has been maintained properly. There can be additional costs associated with “deferred maintenance”, or items that need to be taken care of during a property’s life. For example, see if there are cracks in the side, overgrown landscaping, and/or cracks in the parking lot or sidewalks.
  2. Visually inspect the interior. If you are able to get into the building, pay attention to similar physical characteristics. For example, does the carpet/flooring need to be replaced? Do the lighting (electrical) and HVAC systems seem to be functioning appropriately? What does the overall “wear & tear” of the building look like? It is generally okay if these characteristics are not perfect, but you’ll want to confirm that any concerns you see have been budgeted in the project’s cash flows. Often, this is how sponsors can help add value to a property.
  3. Gather tenant insights. If you are fortunate enough to be able to speak with the tenants, ask simple questions like “how are you enjoying your time here?” These open ended questions can be a chance for the tenant to talk about their experience at the property. This can be important because the tenant may have insight into the pros or cons of the building, which can help to gauge if issues are being addressed and cured, or if there are issues that simply can’t be fixed - such as location itself.
  4. Tour the neighborhood. Simply driving around the neighborhood can give you a feel of the demographics. Is this an upscale area? Is it easy to get around? Are there amenities close by
  5. Tour competitive properties If possible, this can help you think through if you were to choose a place to lease, would it be the subject property, or a competitive property?