Good property due diligence and research will provide investors with a solid overview of the positive and the negative associated with a given property and offer. This is very helpful when you are looking for the right investment that meet your goals which will be based on several factors including yield, potential appreciation in value, are you paying cash or need a mortgage and when and how you will exit the investment.
In this blog post, we will provide an overview of:
What Is Property Due Diligence?
Property due diligence is the process of researching, analysing, and verifying information on an investment property before buying it. This will include the location, figures, the developer, and the legalities associated with the purchase and title transfer, and mortgage requirements if you are using bank finance. Looking into all aspects of a potential purchase will make sure that you have all the information to make an informed decision.
Investing in property can be a big investment and it not without risks. It is important that you understand fully the risks and potential returns involved. Carrying out thorough research and due diligence will achieve this and ultimately help you decide if you should go ahead with the investment.
In doing this and before signing off on an agreement, investors can reassure themselves that they've done their homework while maximizing return on investments.
Why is Property Due Diligence Important & What Should You Consider?
Although there are different property strategies – holding property short-term or long-term, buying property off-plan or already built, buying for cash flow or capital growth – property investors generally all have the same one thing in common – they are investing to create a return on their money. Due diligence makes sure the money you’re investing is do so based on good information as safely as possible also.
Property investors should consider the following:
In the UK you will need to use a Conveyancer (A lawyer who specialises in property purchases and sales) and they have a duty to advise you accordingly and review all the contracts that the developer/seller’s Conveyancer will provide and make you fully aware of any risk or potential losses.