👋Don't invest until you ask these 38 critical questions

[Justin Goodin]

Never invest a dime in a real estate deal until you ask these 38 critical questions:

1. What happens if you get hit by a bus?
2. What do you project the stabilized occupancy to be?
3. What’s the median income for current tenants?
4. What’s the business plan?
5. What are the projected premiums for renovated units?
6. How did you come up with the projected premiums?
7. How much money are you raising for this project?
8. How much of that is for the down payment?
9. How much of that is for cap-ex (capital expenditures)?
10. What is the overall equity multiple?
11. What are the equity splits?
12. Is there a preferred return? Why or why not?
13. How often do you pay out investor distributions – monthly, quarterly?
14. What’s the projected hold time for this project?
15. How did you come up with that timeline?
16. What if the market is soft when the projected hold time ends?
17. How are investors kept up with the progress?
18. Are you taking an acquisition fee?
19. Are you taking an asset management fee?
20. Is there a refinance fee?
21. Is there a disposition fee?
22. What would happen if I had an emergency and needed access to my funds?
23. Who is the property manager?
24. How many deals have they managed like this?
25. Have you worked with this property manager before?
26. Why is the owner selling?
27. How did you find this deal?
28. How much experience do you have with this asset class?
29. What is the total loan amount?
30. What kind of loan are you getting?
31. Is the debt recourse or non-recourse?
32. What are the terms on the loan?
33. What is the LTV (loan-to-value) ratio?
34. What is the debt coverage ratio in year 1?
35. Did you walk the property?
36. Who is on the team?
37. What are their roles and responsibilities?
38. Have you done deals together as a team before?

When you are investing your hard earned capital into a real estate deal, there are no dumb questions.

Every investment has risk. Just make sure you understand the deal and who's running the investment.

What would you add to this list?