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Due diligence

Discussion in 'General Property Chat' started by Joshwaaaa, 26th Jan, 2016.

  1. Joshwaaaa

    Joshwaaaa Well-Known Member

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    22nd Jun, 2015
    Posts:
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    Location:
    Adelaide
    How deep do you go with your due diligence? Is it just a back of envelope type of thing or do you a lot deeper into it?

    I've always been a back of envelope/ in my head type of operator, which has done alright by me. Thinking maybe I should get a bit deeper ino it
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    13th Jun, 2015
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    Location:
    Adelaide, SA
    Really depends on purpose of the deal and the amount at risk.

    Looked very deeply into a potential 700k ppor last year and didn't go ahead due to repair costs. Other end of the spectrum, bought 200k IPs interstate sight unseen on unconditional contracts (but knew / know the market very well)
     
  3. Leo2413

    Leo2413 Well-Known Member Premium Member

    Joined:
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    Location:
    Sydney
    Assuming it is DD for just buying an investment property, this is a list of things i would want to look at/investigate. Some will take more/less time.

    General:
    1. State cycle property clock
    2. Suburb demographics
    3. Price point differences in neighboring suburbs.
    4. Sales history
    5. Suburb vacancy rates
    6. Acr, discounting, supply to demand data
    7. Historical growth trends
    8. Amenities, infrastructure, transportation (current and planned)
    9. Supply of vacant land nearby.
    10. Flood zones (where applicable)

    Then when you are very interested in a couple that tick the major boxes i do the next stage.

    Dwelling
    specific:
    1. Sale history
    2. Size, street appeal, location to transport, amenities, entertainment and compared to other similar homes in the area and their sale prices.
    3. Vendor investigation (price bought, intention for selling, plans after selling, married couple or single person, possible distressed sale)
    4. Days on the market
    5. Add value potential
    6. Views
    7. Condition of home and appliances.
    8. Rentability in current state without any reno/fixing.
    9. Cashflow analysis if bought at X amount.
    10. B & P report/Strata reports (To be used later for possible further negotiations)


    Just some i do. Some are really fast and others take more time.
     
    Last edited: 26th Jan, 2016
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  4. Bran

    Bran Well-Known Member

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    At work
    What's the simplest way to find out days on market?
     
  5. Cactus

    Cactus Well-Known Member

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    18th Jan, 2016
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    Location:
    Melbourne
    Back of envelope

    If it stacks up more detailed DD.

    Other people's money or co investors full DD

    My own stuff much more back of envelope and gut feel. Bad but means less analys paralysis
     
  6. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Location:
    Sydney
    @Bran I just use rpdata and it has the whole selling campaign there , dom, agents engaged, ect.

    If your talking about dom for a specific suburb, property magazines have those stats at the back. Can also use Internet to confirm rough reliability of stats.
     
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  7. See Change

    See Change Timing Lord Premium Member

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    Location:
    Sydney
    Will depend on property etc . DT's and Leo's posts cover what we'd do .

    We tend to buy several in one area and will go into detail with the first re which area , timing etc .

    I'll spend quite a bit of time on the macro stuff , comparative yields between areas , historical growth figures , trends of stock on market I use price finder , sqm and realestate.com.au for that . Once I've done that , I get on the phone and talk to several agents in an area to get a feel for what's happening . Main thing is too ask open questions and not to ask any leading questions .

    Once we know the area it's more making sure the particular property is sound with out any significant negatives . In Brisbane PD online is the best source for making sure it isn't subsidence , flood affected etc .

    We like places that are sound , with standard layouts and no major negs with neighbours etc

    Cliff
     
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  8. HUGH72

    HUGH72 Well-Known Member

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    Location:
    FNQ
    For free information try: www.oldlistings.com.au
     
  9. Azazel

    Azazel Well-Known Member

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    Posts:
    8,113
    Location:
    Brisbane
    You can see days on market quickly here, not sure how up to date the data is though:
    Boomtown