First-time investors want the perfect investment opportunity.
How do you know when you’ve found it?
When considering a property, most investors reference an OM, or Offering Memorandum.
It’s an informational document that gives you an overview of the property, its financial details, and potential risks and returns.
It’s meant to give investors context about the kind of deal they’re getting with a certain property, while leaving some room for brokers to hypothesize pro’s and con’s.
In order to feel confident about your investment, you’ll first want to be familiar with OM’s.
In future posts, I’ll break each section down in detail, but for today, I’ll just be outlining the kind of information you’ll see.
Property Info: The Basics
-Sale Price of the Property
-Cap Rate & GRM
-Mechanical Info
Location Info: The Appeal
-Neighborhood Overview
-Nearby Points of Interest
-Visual Maps
Financial Analysis: The Numbers
-Investment Overview
-Unit Mix & Operating Costs
-Financing Data
Rental Analysis: The Opportunity
-Average Rental Income per Unit
-Potential Market Rents
Sale/Rental Comparables (Comps): The Case Studies
-Examples of Sold Properties and/or Rental Properties Transacted that are similar to the Investment Property
-Financial Overview of the Comps
Additional Information: The Final Bow
-Property Tax Information
-Floor Plans
-Brokerage Stats
Do you feel confident assessing all this data?
If not, perhaps the first step is knowing what you don’t know, and then taking steps to learn as much as you can before investing.
Each section of an OM contains vital information to inform your decision-making, and as you learn more you’ll be able to efficiently screen which property has your name on it!
