Many investors like to tour the physical asset as part of their 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 the offering detail page.
Following are some general considerations to keep in mind when touring a CRE asset.
- Visually inspect the exterior of the building. Look for any issues with the landscaping and physical asset itself. This is 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 cracks in the parking lot or sidewalks.
- Visually inspect the interior. If you are able to get into the building, pay attention to similar physical characteristics. 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 okay if these are not perfect, but you’ll want to confirm that any concerns have been budgeted in the cash flows. Many times, this is how sponsors “add value” to a property.
- 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 will be a chance for the tenant to talk about their experience at the property. This is important because they will give you the “pros/cons” of the building to let you know if the issues can be addressed and cured, or if there are issues that can’t be fixed - like location.
- Tour the neighborhood. Simply driving the neighborhood will give you a feel of the demographics. Is this an upscale area? Is it easy to get around? Are there amenities close by? These characteristics should match those of the tenants who are occupying the asset.
- Tour competitive properties (if the opportunity exists). This will give you a chance to ask yourself “If I were to choose a place to lease, would it be the subject property, or a different one?”