A systematic checklist and decision framework for evaluating real estate investments — inspired by the disciplined approaches of Warren Buffett, Charlie Munger, and other master investors.
Atul Gawande's research shows that checklists dramatically reduce errors in complex decisions. Real estate investing involves dozens of variables — financial, legal, structural, and market-related. A structured checklist ensures you don't skip critical evaluation steps when emotions run high.
- Economic Fundamentals: Is the local economy growing? Check employment trends, population growth, and income levels
- Supply & Demand: What is the vacancy rate? Are new developments flooding the market?
- Comparable Sales: Have you analyzed at least 5 comparable recent transactions?
- Rental Market: What are current rental rates for similar properties? What's the trend?
- Regulatory Environment: Are there rent control laws, zoning changes, or tax policy shifts coming?
- Physical Inspection: Has a professional inspector examined the property?
- Structural Integrity: Foundation, roof, plumbing, electrical — what are remaining useful lives?
- Deferred Maintenance: What immediate capital expenditures are required?
- Environmental Issues: Any contamination, flood zone, or natural disaster risks?
- Title Search: Is the title clean? Any liens, easements, or encumbrances?
- Cap Rate: Net Operating Income / Purchase Price — is it above your minimum threshold?
- Cash-on-Cash Return: Annual pre-tax cash flow / Total cash invested
- Debt Service Coverage Ratio (DSCR): NOI / Annual Debt Service — should be > 1.25
- Internal Rate of Return (IRR): Projected over your holding period
- Break-Even Occupancy: At what occupancy rate do you cover all expenses?
- Stress Test: Can you survive 6 months of vacancy? A 2% interest rate increase?
Apply Warren Buffett's core investment principles:
- Circle of Competence: Do you truly understand this property type and market?
- Margin of Safety: Are you buying below intrinsic value? What's your margin of error?
- Economic Moat: Does this property have durable competitive advantages (location, unique features)?
- Management Quality: If hiring property management, are they trustworthy and competent?
- Long-Term Thinking: Would you be comfortable holding this property for 10+ years?
- Financing Terms: Fixed vs. variable rate? What's the total cost of capital?
- Tax Implications: Depreciation benefits, 1031 exchange potential, local property tax trajectory
- Exit Strategy: How will you exit? What are the realistic sale scenarios?
- Legal Structure: LLC, trust, or personal ownership? Asset protection considerations
- Falling in love with the property — let numbers make the decision, not emotions
- Ignoring opportunity cost — compare against alternative investments
- Underestimating expenses — budget 10-15% of gross rent for maintenance reserves
- Overleveraging — conservative debt levels protect against downturns
- Skipping due diligence — every shortcut creates hidden risk
Study the investment principles of Buffett, Munger, Dalio, and other legendary investors at KeepRule — a platform that distills the wisdom of the world's greatest decision-makers into actionable frameworks.
This project is licensed under the MIT License - see the LICENSE file for details.