What are your due diligence checks?

Great list guys - will work it into a spreadsheet to suit me and will try for levels of importance in it as well.

Chris - what do you mean by property overlays, approved DAs and Average tenant lease term per age group?
Also wondering, "I'm particularly interested in suburbs that haven't had a recent spike in growth" - is that to avoid the suburb or does it make it better? Why are you particularly interested?

 

The overlays and easements for a property can often be found by doing a property enquiry on the council’s website and also in the relevant searches; Overlays may effect what you can do with a property or sometimes certain overlays may negatively impact on a property’s value.

For example;

Infrastructure easements (sewer, stormwater etc..)

Steep slopes overlay

Bats and birds

Flood / Fire

Acid Sulphate Soils

Height restrictions

Character housing overlays

Etc…………….


By approved DA’s I mean looking at what structures have been approved for the property (so which ones may be illegal). And I also look at approved DA’s for the location and suburb – i.e. what is coming online, will it positively or negatively impact property supply?

Lease term per age group is the average lease term for a type of property for a suburb broken down by age demographic - this tells me what types of tenants to source (i.e. who stays the longest), what areas have more transient tenants etc........this will effect cash flow going forward.

As far as determining suburbs that haven't overshot yet, there is a fair bit more to it.

 

Thanks for all that!

So it's just a red flag telling you to look more into it?

 

Hi @Chris White it sounds a little like you may deal with development sites for clients as well. If you do, i am just wondering to what extent do you do DD with the council for your client with regards the clients development plans.

Thanks mate.

 

Leo, if a clients brief is for a sub dividable or small development site, we co-ordinate all the pre-purchase DD with the relevant consultants, town planner etc. And we source the property obviously.

We don't work with large developers, this is mainly for our more sophisticated investor clients that want to have something with upside in their portfolios.

In a rising market, properties with a DA can achieve good prices.

Note: I wouldn't encourage or do this for inexperienced investors.

 

Thanks @Chris White And I think its responsible of your company that you don't lead inexperienced investors down that path. Kudos for that.

 

To add, we check off all the items on the due diligence list that I posted earlier (+ more) for every property purchase regardless. Its good to know all the pluses and minuses of a property irrespective of any intentions to add value to it.

 

This. You can access reports from various agencies to check easements, power lines and even broadband supply. If possible, I use as part of my "Google" DD before I even visit

Have you tried Purple Door? You can rate properties via various categories although I found it way too clunky to use so I only tried once, but you may have better luck

 

Absolutely agree, well said , Y man

 

I use the Bricks Inspector app. It lets you create your own customizable checklists. You can also attach photos and voice memos to the inspection items.

 

Just downloaded this one, looks good at first glance. Will make up a due diligence template and see how it goes.

 

Never heard of it but will check it out.
Did you make it?

 

This - but it can be counter intuitive. You can buy something where there's no demand and it can stay that way for years, or you could buy into an area that just keeps on rising. You have to know your market.

 

Yes, I'm a programmer on that project. It is fairly new so hasn't yet been widely marketed.

 

Cool, good on you.
Lots of people who are going to something but never get around to it.

 

Awesome info on this post, I'm starting to work on my own DD process now. Most of this info tackles the individual properties. What is everyone's process from a state to city to suburb to street to property level? I guess when you find your suburb you would look at all the properties on the market then rule out the ones that don't fit your criteria then apply the DD process above to the remainder.

 

I don't really go state - city - suburb - street.
I'm usually keeping an eye on several locations at once. Whichever one has the best buy at the time wins. This could mean submitting offers on multiple properties. If you spend too long on just one, if someone else gets it or you walk away, you have to start all over again.

 

Construction materials used and orientation are important. Utility costs are on the rise. The cost of retro fitting insulation, double glazed windows, water wise fixtures, solar panels, smart wiring should be considered. Utility costs savings achieved from the mentioned modifications to a home can be allocated to mortgage repayments, thereby reducing the term of the mortgage.

Alternatively cheaper utility costs make a home more attractive to renters giving you a competitive advantage in the rental market place.

 

Yep, if everything else ticks all of the boxes, that's the one that gets you moving again.

 

My last purchase DD was; saw the r/e ad, made an offer after one inspection, bought...less than 24 hours. Is this bad?