A Guide To Property Investment Due Diligence

A Guide To Property Investment Due Diligence

Making the decision to invest in property is one of the biggest commitments that you’ll ever make – and one which should never be taken lightly.  Whether you’re looking to invest in a single buy to let property or, an entire development, it’s essential that you follow the due diligence process to ensure that your investment is protected.  If you’re new to property investment, avoiding common pitfalls can be tricky but, never fear, the following is our guide to conducting due diligence before committing to an investment.


What is due diligence?

Put simply, property investment due diligence is the process of conducting thorough research on a property and/or an agency or partner in order to understand the benefits and the risks of making that investment.  If you’re working with a company such as an agency or an individual partner, your due diligence will include background checks on that organisation to evaluate its credibility and financial status.

Property due diligence takes in a number of factors and involves building a strategy to gather information, ask questions and, ultimately, make an educated decision when measuring price against value.


The process

Property investment isn’t – and shouldn’t be – a fast or casual process.  In order to avoid costly errors, you need to follow each step of the due diligence process as follows:


Getting down to business

If you’re planning on making a property investment through an agency or partner, your first step is to make sure that they are who they say they are.  You can do this by looking at the business or individual up at Companies House, the UK’s registered company portal.  The Companies House site is free to use and, will allow you to view a company’s details to check (a) how long it has been trading and, (b) its financial viability – which will tell you the state of the company’s finances and, whether its accounts are filed on time.  If a business is brand new or has been delinquent in filing its accounts, alarm bells should be ringing and, you should really think twice about any kind of partnership or working relationship.


Market value

In order to ascertain whether or not a property is a good investment, your next step will be to check out similar properties which are for sale and have been recently sold.  To get a true picture, you need to gain an understanding of the local area in terms of property sales and demographics; for example, if you’re planning to sell on your investment property as a family home, you’ll want to ensure that there’s enough demand in the area.  Similarly, if you’re investing in a property with a view to renting it out, you’ll need to find out the rental statistics for the region.


Crunching the data

When gathering the data for your due diligence, it’s vital that this is accurate and up to date.  There are lots of online tools available to help you with this.  Although most of these do involve a fee, it should be considered a worthwhile investment as it may save you a considerable amount of money in the long run.  You can also use the UK House Price Index to get an up to date idea of what the proposed property may be worth

A Guide To Property Investment Due Diligence Opulence Invest

Basic instinct

The above steps are of paramount importance in making the decision to invest in residential property and will help you to answer all of the pertinent questions.  Equally important is the ability to trust your instincts when deciding if the investment is right for you.  Experience tells us that, if a deal seems too good to be true, it usually is.  If you have any doubts then it’s best to hold out for an investment which ticks all the boxes for you.

Whether it’s a business move, a retirement fund or a way of adding a new source of income, property investment can provide a lucrative, long-term solution.  By conducting your due diligence before signing on the dotted line, you can ensure that your investment benefits you and your family for generations to come.

Are you ready to start looking for a property investment opportunity? Check out this free Property Investment Checklist to assist you on your search.

A Guide To Property Investment Due Diligence Opulence InvestDownload our property investment checklist HERE.

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