As well as using a tried and tested property investment strategy, investors must apply due diligence. This is basically the process of investigating the property you wish to buy before closing the deal. First time investors may think of due diligence as voluntary but to the savvy investor it is absolutely mandatory. But if you devise a checklist which includes the following hints and tips, you will minimise the chances of risk greatly.
There is simply not enough property investment advice and research you can absorb before signing the contract. Any good property investment guide will tell you that firstly, you need to organise inspections to make sure hazardous materials such as mould, asbestos and pests are not present.
Deciding on a suitable strategy for investing in property is also important. Two of the most common are the ‘flip’ and ‘buy to hold’ strategies but more important than any of them is the ‘exit’ strategy. This must be in place before you even begin to view properties.
Any source of sound advice on property investment will recommend that you get title insurance. This is a relatively cheap insurance which covers you if there are any problems regarding the title further down the line. Double check the title, ensuring there are no other judgements, encumbrances or liens on the property that you were unaware of. But even if you have made numerous efforts to ensure everything related to the title looks fine, it’s always better to be safe than sorry. You might think it’s unnecessary but it is important that you are entirely sure that the person selling the property is the owner of the property and its land. You can confirm this by carrying out a search at the local Land Registry office.
Ownership is an issue which must not be overlooked. Unfortunately, many honest investors have paid the price for not applying due diligence, with developers claiming they own the land then taking funds from the investor when in fact they do not own the land title and in some cases building permission has not even been given. Thinking it will never happen to you is foolish. It is crucial that you incorporate this investigation into your investment property strategy. You can even save legal fees by doing it in person.
When purchasing something of this expense and importance, it’s essential that you know all the facts. Don’t believe everything that salesman or other interested parties tell you and never part with your hard earned cash without carrying out thorough background checks with a fine toothcomb. It is surprising how many people will hand over their taxed income and apply to borrow thousands from the bank when the relevant research has not been carried out.