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 they 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 overnight – a case of burying 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 spreadsheet), some of the areas I look at are:
✅ Street Check – a great source for area demographics, crime statistics and housing tenure.
✅ Zoopla and Rightmove – 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 checklist will keep you on track.
DISCLAIMER: Now you’ve guessed it this is not an exhaustive list, just a brief snapshot of the sort of things to be considering. After all it is your due diligence, so make it specific to you!
