Real Estate Risk Audit Checklist

How to Use This Checklist:

• Review this checklist annually for each property.
• Mark each item as Complete, Needs Review, or Action Required.
• Address any high-risk areas before acquiring additional properties.

1. Market Risk Assessment

• Review local job growth trends.
• Compare current rent to market rent.
• Evaluate new construction in the area.
• Assess population growth or decline.
• Analyze vacancy rates in the submarkets.

2. Cash Flow Stability

• Confirm DSCR ≥ 1.20.
• Verify positive annual cash flow.
• Maintain 6 months of operating reserves.
• Review maintenance & CapEx forecasts.
• Stress-test rent at the -8% scenario.

3. Leverage & Debt Structure

• Confirm loan-to-value ratio under 80%.
• Verify fixed vs. adjustable rate terms.
• Review refinance timeline & maturity dates.
• Evaluate exposure to rising interest rates.

4. Liquidity & Reserves

• Maintain an emergency cash reserve.
• Confirm access to line of credit if needed.
• Calculate break-even occupancy rate.
• Ensure property can sustain 3–6 months vacancy.

5. Operational Risk

• Review tenant screening procedures.
• Confirm adequate landlord insurance coverage.
• Verify property management oversight.
• Conduct annual property inspection.
• Review legal compliance & lease terms.

6. Portfolio-Level Risk

• Evaluate geographic concentration.
• Assess asset class diversification.
• Review debt concentration timing.
• Analyze exposure to a single tenant or industry.

Risk Summary Notes

Disclaimer: This checklist is for educational purposes only and does not constitute legal, tax, or financial advice.