Is the rent as dependable as it looks?
Check who pays, whether rent is current, lease expiry dates and dependence on a major tenant. Have the relevant advisers review the leases.
How much money is actually left over?
Operating expenses, debt payments, major repairs, tax and other commitments reduce what owners may receive. Operating profit can still leave investors needing to contribute cash.
Conceptual cash-flow sequence only; timing and amounts depend on the property. This is not an accounting or tax calculation.
What if the empty space stays empty?
Potential rent is different from rent received. Allow for leasing time, renovations, incentives and fees. Understand who funds a longer or more expensive shortfall.
What happens when something needs replacing?
Routine repairs differ from replacing a roof, elevator or heating system. A reserve may not cover a large bill. Obtain appropriate advice on timing and costs.
Are you buying a building or a company?
A share purchase may bring the company’s history, debts and obligations. Your lawyer and accountant should explain ownership, liabilities and cash needed at and after closing.
How does the borrowing work?
Understand repayments, maturity and the risk of being unable to refinance. Review seller financing and income support carefully. Proposed use of retirement savings requires specialist advice before assuming the arrangement is available or suitable.
Could you manage a less favourable outcome?
Consider lost tenants, higher borrowing costs, early repairs and limited sale options. How much additional money could you need, and who would provide it?
General education only. Suitability depends on your circumstances and the relevant investment, lending, legal and tax documents.