Continued from Researching a 1031 Firm Part 4 (Link)
11) Confirm the 1031 syndicator's projections: How are the projected incoming rents secured? Is it secured by a long term lease, or are you exposed to tenants moving out? For non-"true triple net leases" (where syndicators are the master leasee), how realistic are the projections for maintenance upgrades and property improvements?
12) Validate the local real estate market: For people investing in properties outside their local area, really research the targeted property's regional market. Returns in real estate are from both cash flow and appreciation. Try to understand the underlying dynamics--population growth, employment growth, wage growth, and historical appreciation rates.
13) Validate the value of the property: Be skeptical of the appraiser's valuations. Look at local comparables. The hard part in the industry is acquiring properties. Syndicators looking to make a quick buck, overpay.
14) Understand how TIC agreements affect things like property management, repairs.
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