What is "Due Diligence"?
There is obviously the Oxford English Dictionary definition….however, in simple terms “DD” is all about making sure you have fully appraised a company, person or a deal to such an extent that you feel you know; and have found out as much as you can in order to avoid a major screw up! 😭
🤝 Relationship DD 🤝
Now we are not talking speed dating here, but the embryonic stages of developing a business relationship with someone who may be a potential client, JV partner or accountability buddy! Relationships underpin great businesses: what do I look for?
- ✅ Honest, straight talking and balanced personality.
- ✅ Approachable friendly nature, with a warm and genuine kindness.
- ✅ True to their word – do what they say there are going to do and do it!
- ✅ Humility – how many know it all types have you come across?
- ✅ Have a sense of humour, can laugh at themselves and enjoy a chat!
DD Companies 📑🧐
One of my “GO TO” places is Companies House. It is amazing what you can find out from a quick search! When I started my property journey I was looking to use a sourcing company in the North East (but something just did not feel right – I am a believer in gut feel 😁) and a quick search on CH revealed not only did they have a CCJ (County Court Judgement) they also had late filing of their accounts. 🙄
- If you can’t file your accounts on time what else are you not doing? 👎
- Eeeek… a CCJ does not just pop up over night – a case of bury your head in the sand! Not a great quality for a business leader! 👎
🔨 Property Due Diligence 🔨
Probably the one people feel most comfortable with as property investors as the one that is within our control. I follow an established practice of carrying out micro level DD on each deal (I love a spread sheet), some of the areas I look at are:
- ✅ Street Check – a great source for area demographics, crime statistics and housing tenure.
- ✅ Zoopla and Right Move – comparable house prices.
- ✅ Land Registry – title deeds / restrictive covenants.
- ✅ Office of National Statistics – stats galore!
- ✅ Local Council Website to assess local and government investment initiatives.
- ✅ Speak to Estate Agents – rental demand, areas to avoid, good areas, appetite in the market for your investment strategy.
- ✅ Does the property meet your “check list”? – do you have one, if not then TOP TIP create one, it is easy to get distracted and your check list will keep you on track. Watch out next week we will be sharing out BTL criteria!
DISCLAIMER: Now you've guessed it this is not a exhaustive list, just a brief snap shot of the sort of things to be considering. After all it is your due diligence, so make it specific to you! 👏👏
