Tip of the Month - May 2006
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Source: Journal of Property Management
By Bodie J. Beard, CPM, SRA, SRPA
Risk: There is always some
risk attached to a real estate venture. The older the property,
the greater the risk. The more deferred maintenance & upkeep,
the greater the risk. Even Tenant mix & lease terms might
increase the risk. With an income-producing property, the
quantity, quality, & durability of the income stream is extremely
important. Therefore, it is essential that these elements be
considered prior to the commencement of ownership. If these three
factors are favorable, then there is less risk. If the leases are
below the indicated market, or the terms are shorter than the terms in
the market, then this might add additional risk to the venture.
The inverse of this is that the newer the property & the more
favorable the lease terms, the less risk.
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page was updated on 05/02/2006.