Maintenance budgets for Landlords
Find out why a Landlord maintenance budget is essential for all Landlords. Read More…
by Peter Ambrose on
Article appears under:
Due Diligence,
About Property Investment,
Legal,
Renovations and Maintenance,
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As a property investor you need the skills to analyse a property and ensure that what you see meets your expectations and the outcome you are after.
This can all take time and each property requires various levels of investigation. In saying that, there are similar high level actions you should check off on all properties.
When you find a property that looks interesting and has the potential to meet your needs, I always recommend getting it under contract as fast as you can. Sometimes this is not possible if the sale is by Tender or Auction, but if you are able to negotiate a price, get it under contract. This is so you can take control and no one can take the opportunity away from you until you have completed your due diligence within your conditional period, or the conditional period expires.
If possible, I always add a general due diligence clause to the conditions of the Sale & Purchase Agreement, which is extremely "open" and allows you to pull out of the purchase for any reason. Rather than stating clauses such as, engineers report or suitable finance clause, I stick to the generic due diligence clause that all real estate agents have access to. I try for at least 10 days but sometimes that is not possible. Work with the agent and vendor to agree on both a mutually acceptable price and terms.
Once under contract you can now start your investigations; the more you can do, the less risk will be involved in the outcome. Some free options available to you are:
Other Due Diligence will cost you money and time so ensure you prioritise your expenses based on the time of the conditional period and investigating your main concerns first. You could organise the following:
This is in no way an exhaustive list of actions but will certainly go a long way to reduce your risk and ensure what you are buying is exactly what you are expecting.
If you uncover issues that you weren’t expecting or are costing a lot more than expected, you still have the ability to negotiate with the vendor by way of a reduced price to compensate, or ask the vendor to fix the main issues that you uncovered. Failing that, you have the option of pulling out of the contract and moving onto the next deal, knowing that the money you spent on the due diligence was well worth it and would have saved you thousands of dollars if you hadn't done all your homework.
If you do go unconditional, it is time to plan all the things you want to put into action when you finally take possession…. good luck and happy investing!
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Due Diligence can be a hectic time and it is important to know how much time you need before you start. It is a good idea to have loan pre-approval in place before you make any conditional offers on a property as banks can be slow to respond at inopportune times.
Depending on the property you may need to do other checks. iFindProperty is able to help an investor do comprehensive Due Diligence on a potential purchase and can arrange, on your behalf, almost all of the above Due Diligence checks along with others that may be required.
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