Key Investment Property Buying Due Diligence Points to Consider.
Due Diligence entails carrying out detailed research about your proposed project area or for a specific development.
The following points provide you with some essential key due diligence ideas to consider. These points are key whether you are buying investment properties in the UK or abroad.
Don’t part with your hard-earned cash until you have done a thorough due diligence research.
Make sure to visit the country / specific area / city and check out the area from both a holidaying, residential and local indigenous demand factors.
What is the climate like at different times of the year? Does it suit you? Will it suit your target market purchaser?
Are you able to live there all year, every year? What is the relevant residency and visa legislation in the country.
Explore detailed records to establish if it is in a flood / earthquake / tsunami / erosion zone. If so, what are the structural construction methods and requirements currently in force.
Explore the local and wider area to see whether it suits your preferences.
Consider whether the building is of an older style and construction. How will it stand up to the effects of tremors, rainfall, river & sea levels etc. Is it suitable or adaptable for modern living in a changing climate?
Always think about your possible exit strategies. What options are there if you decide to pull out of a purchase or wish to sell later on? Think about the saying to “buy the worst property in the best street”. Explore which side of the street is more popular and valuable?
Are local people already buying or living in the estate or near by areas? Would they be likely to want to buy and live here in the future?
Visit the developer / agent at their office. View any past and present sites that they have completed. Are they working on other projects than the one you are interested in. Do they have secure cash flow to complete these projects? Consider their local reputation and longevity.
Carry out enquiries about legislation over land tenure, planning rules and approvals. Enquire about building construction regulations for the area with the local authority.
Speak with a number of local property sales and letting agencies about the companies involved and the popularity of nearby areas.
Look at current and past constructions, partners, funding, banking, security, land legalities, locality, access of any developer or builder.
While you’re there, check out the development. How far advanced is it? How is it going to be monitored for build quality and design standards? How does it fit in with the surrounding area. How many other similar developments are under construction or planned.
Are there a good range of local amenities like shops, restaurants, medical facilities, community meeting places.
Speak to as many local people as you can. Find out how many investors have purchased in the block or development.
How long is planned between the finishing of the first phase and the last phase?
Timescales before any external infrastructure comes on line and what if it is late? Roads, power, water, sewage, communications etc
Where are the nearest airports, main roads, railway stations, bus & coach services, taxis, shops, restaurants, bars, hotels, beach facilities, swimming pools, banking, post offices, phone lines & mobile internet services, etc.
Is any part of the development work being outsourced, and to whom?
What are the backgrounds and details of the sub-contract suppliers.
Make sure contact has been made with the electrical, water and drainage suppliers and that the development can be connected with all of them. Who will pay the connection fees and carry out the work and when will it be done?
Be careful about any adjoining properties. What might the other owners do with their sites?
What are the local taxation systems. Are there any specific visitor or resident taxes likely to be applied?
A development / refurbishment project should only be chosen after you have done significant research into the country, the region, and the locality.
How secure will any up front deposit payment be. Are there any specific guarantees or third party bond arrangements?
Note: This is not an exhaustive list of due diligence considerations’ and will be added to over time. You must be certain to carry out your own deep due diligence on any investment you are making. Make sure to seek all necessary local legal advice. Be exhaustive in your due diligence investigations and keep asking questions.
Whilst we will always endeavour to carry out our own detailed property due diligence checks and reviews, we can not be held responsible for events that happen that are beyond our control. Situations caused by companies that we may recommend but over which we have no influence are not in our control.
Be smart, review your foreign cash transfer options today. We recommend Wise Bank