When it comes to real estate investing, curiosity doesn’t just help—it’s essential. Asking the right questions ensures you’ll uncover a property’s potential, risks, and performance, giving you the knowledge to make confident decisions.
At Security Bank & Trust Co., a trusted Minnesota real estate lender, we understand that every smart investment begins with asking the right questions. Let’s explore the seven critical questions to ask your real estate agent before you commit to your next investment property.
1. Why Is the Owner Selling?
This question provides valuable insights into a property’s history. Sometimes, owners sell for neutral reasons like moving or downsizing, but other times, it could signal potential red flags. Is the property experiencing major repair issues? Are there neighborhood concerns, such as declining demand for rentals?
Red flags to watch for:
- The property has a history of frequent ownership changes.
- The owner is selling shortly after purchase.
These can signal major, costly problems like faulty wiring, roof replacements, or a failing HVAC system. As a real estate investor, you'll want to avoid getting stuck with significant expenses before your investment starts generating positive cash flow.
2. What Is the Neighborhood and Building Vacancy Rate?
The vacancy rate tells you a lot about your potential for profitability. A high vacancy rate might indicate a weak rental market or overpriced units. Conversely, a low vacancy rate is a good sign of steady demand.
For multi-family properties, vacancies can lead to higher overhead costs, such as maintenance and utilities. For single-family properties, vacancy rates reflect the broader neighborhood performance, giving you insights into market trends.
As a trusted Minnesota Bank, we encourage investors to analyze both the property and the area to assess potential risks and opportunities.
3. How Transitory Is the Neighborhood?
High tenant turnover can eat into your profits due to increased maintenance, marketing, and vacancy gaps. While short-term rentals like Airbnbs thrive on turnover, long-term rentals benefit from stable tenants.
By understanding the area's transitory nature, you can tailor your strategy. Ask yourself:
- Will you cater to families who want long-term housing?
- Or target young professionals who may move frequently?
Both strategies have pros and cons, and your choice will affect your marketing and operational costs.
4. What’s the Property’s Tax Bill, and Will It Change?
Property taxes can significantly impact your bottom line, so don’t overlook this question. Property tax assessments depend on factors like the size, location, and use of the property. If you’re buying at a price higher than its current assessment, your tax bill could jump after the sale.
As your Minnesota real estate lender, Security Bank & Trust Co. encourages you to do your due diligence by researching local tax laws and planning for potential increases.
5. Which Direction Are Mortgages and Rents Trending?
Both mortgage rates and rental rates have a direct impact on your ROI. If mortgage rates are climbing (as they are in 2025), securing financing sooner rather than later is essential. Similarly, keeping an eye on rental rate trends can help you predict income growth.
To stay ahead, use tools like rental comps to see how similar properties in the area are performing. At Security Bank & Trust Co., we help investors understand how these trends affect their overall investment strategy.
6. When Were Key Components Last Replaced?
Big-ticket items like the roof, furnace, air conditioning unit, and water heater are crucial for maintaining the property’s value. If these components are nearing the end of their lifespan, you could face significant repair costs.
For example, roofs typically last 20-30 years, while furnaces and water heaters may need replacing every 10-15 years. Always ask for documentation and consider hiring a home inspector to verify the condition of major systems.
7. What Risks Am I Taking On?
Even if everything looks good on paper, every property has some level of risk. This is where your real estate agent and Minnesota real estate lender can provide valuable insights. Are there environmental risks? Potential zoning changes? Structural concerns?
At Security Bank & Trust Co., we help our clients identify both manageable and hidden risks so they can make informed decisions.
Why Work with Security Bank & Trust Co.?
As a leading Minnesota Bank and real estate lender, we specialize in helping investors achieve their financial goals. Whether you’re buying your first investment property or growing your real estate portfolio, our expert team is here to guide you every step of the way.
Final Thoughts
Real estate investing can be a game-changer for building long-term wealth, but asking the right questions is key to success. From understanding a property’s tax history to evaluating market trends, each step helps you avoid costly mistakes and maximize your returns.
Start building your real estate portfolio today! Reach out to one of our real estate lending experts at Security Bank & Trust Co.—the trusted Minnesota Bank for investors.
