1. Identify the starting evidence.
For a leased property, request the lease details and evidence of the rent being received. For an unleased property, ask what supports the proposed rent: comparable completed leases, current asking rents or a future estimate. Date the information and keep those categories separate.
2. Ask what the headline includes.
Rental income before expenses is a different figure from income after costs. Ask which costs and purchase outlays the proposal includes, which it leaves out, and who pays each recurring charge. Keep financing assumptions separate so two properties can be compared on the same basis.
3. Read the occupancy assumptions.
Check whether the illustration assumes continuous occupancy, immediate letting or future rent increases. Ask how a period without rent, a delayed letting or a change in tenant would affect that illustration. These are questions to test, not predictions about what will happen.
4. Bring the lease into the discussion.
Where a tenancy exists, identify the rent, remaining term, proposed increases, deposit and relevant break or renewal arrangements. Record who has supplied the information and which points still need verification.
Compare the evidence as well as the figure.
Use the same categories for each property: rent basis, occupancy, costs, tenancy and time horizon. Keep confirmed information separate from assumptions. A headline percentage by itself does not establish what a particular property will deliver.
Discuss an investment proposal