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Past, Present and Future - Who Cares?

December 3, 2019

Who Cares?

There are always 3 entities always interested in any piece of an investment property. The investor, the bank/lender, and the government.


When you are financing an investment property among other things the bank/lender will ask for:
a. Full copies of the last 3 year's property federal tax returns or profit & loss statements.
b. Year to date profit & loss statements
c. Current rent rolls
d. Copies of lease agreements
e. Most recent surveys if available
f. List of capital improvements with costs made over the last 3 years
g. Taxes and assessments


While you as an investor should also be definitely interested in these, banks/lenders look more at the past and present than the future. On the other hand, the government is more interested in the future and the potential of that property to generate employment in the area and bring in revenue for the government in the future.


An investor when looking at a commercial property should look at the highest and best use. The highest and best use means the property is maximally productive.

Past: Has the investment been profitable in the past?
Present: Is the investment profitable today and is the present use producing the highest return?
Future: If the current use is not maximally productive is it physically possible, legally permissible, and financially feasible to repurpose the property to a use that yields the highest net return to the investor?

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