Top Due Diligence Mistakes


Due diligence may be one of the more important aspects of a real estate investment but is rarely talked about during discussions of how to be successful as an investor. When purchasing these real estate investments as a property manager, it is extremely important to make sure due diligence has been done properly. Below are some tips to avoid due diligence mistakes.

Trusting the Seller

Some sellers may not be very forthcoming when explaining the problems of their property to buyers. It is important to look into the details of the property before purchasing it and not assume anything. Buyers must get documentation, invoices, liens, and any other items they can think of in order to check for any problems with the property. There may also be issues with current tenants so checking all lease agreements and understanding the nature of the tenants will be extremely helpful in making sure there are no undiscovered problems. Lastly, the building may not comply with all building codes and it is imperative to check that it is in compliance before purchase.

Improperly Valuing the Property

Before purchasing any property, it is imperative to understand the market prices and the value of the property being purchased. Investors should check multiple buildings before deciding on their purchase to make sure that they are purchasing a good investment. When a property is found, the investor should use these other properties to figure out a proper valuation.

Not Understanding the Property

Investors should highly consider visiting the property at different times of the day to truly know what goes on there. There may be problems not shown during scheduled visits and it may also be a chance to meet tenants. The investor should also look at other commercial properties in the area to gain a better understanding on how their property does against others like it. Lastly, the investor should also go through every unit in order to avoid any surprises.

Checking the property from top to bottom will be worth it to a real estate investor before purchasing a property in order to avoid any problems. If investors avoid the above mistakes, they will have a much better chance at purchasing a property they can profit from. Comment below with other tips and follow me on twitter!


Photo Credit – Tanamera Construction

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