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Determining Capital Requirements | International Residential Real Estate Investors Association
Saturday August 19th 2017

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Determining Capital Requirements

Investors prefer certainty and capital is a large component of that.  During due diligence, the objective for capital are:

  • Determine cash requirements to complete legal and other preclosing costs,
  • Determine cash requirements for anticipated rent roll changes post closing,
  • Determine needs for immediate improvements as  determined by your physical inspection,
  • Determine needs for immediate improvements as required by the property condition report,
  • Determine needs for improvements to support the business plan developed for the property,
  • Determine improvement capital requirements for the initial capital reserve,
  • Evaluate and quantify marketing cost requirements,
  • Allow a buffer of cash reserve for the inevitable development that are not anticipated during due diligence, and
  • Evaluate and quantify reasonable reserves for potential negative operating costs during immediate ownership and based on potential future risk.

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