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With the majority of property investments purchased off-plan or at least early on in the build phase, property due diligence (DD) is absolutely fundamental to every investment.  Before we add a project to our portfolio we begin a thorough (DD) process – even when we have worked with a developer for a number of years and seen their other projects complete. Every project has the same suitability process to understand the means to delivery, who the contractor is and the schedule of works – along with ensuring there is demand in the area, the return is sustainable and the purchase contracts are all in order.

Property Investment Due Diligence Checklist

Developer Check

We check the track-record and history of the company for you to have peace of mind of: land ownership, projects already completed, Companies House Check relating to the projects SPV and who the Contractor will be.

Project Suitability

We check planning approval documents, when the project will start construction and whether the start date is subject to anything e.g.: build funding. Most importantly we look at how investors monies are ring-fenced i.e.; how project cost management is controlled and a contingency plan by the developer – so in the event of assured rental shortfall this will be sufficiently covered.

Project Details

Here is the exciting part, where we look at the asset and investment model combined. The purchase price and the assured yields and what will happen after the 3,5 or even 10 years assured rental period. Importantly, what will the annual fees be in a few years and what projected rental should the property be yielding.

Management & Lettings

A developer will usually have an experienced management and letting company in mind pre-construction and be in preliminary discussions with them. It’s important to check the developer has clear appraisals of achievable annual rental income along with realistic service charge and management fees.

Location Review

We look for under supply to dictate demand and in-turn keeps rents buoyant and on the rise. Positives are regeneration projects in the area and in relation to student accommodation, the expansion plan of the local universities. We compare local like-for-like properties and look at rent comparisons to ensure what is being assured yield wise is realistic and attainable.

Solicitors

We always have a solicitor that we can recommend to you. With a recommended conveyancing in place, we ensure the Solicitor Fee and disbursements are negotiated & already clearly laid out – no need to source and negotiate fees with a solicitor – and due to the standard 28-day turn-around to Exchange, we ensure our recommended solicitor has already received Purchase Contracts and has in-advanced prepared the Report on Title.

Contracts

We review the contracts as an important part of the property check. We look at how they are structured in terms of the assured rental yield and if applicable the buy-back exit strategy. We ensure all contracts and its covenants are assignable in the event of resale and that there is developers’ authority to sell before completion in certain circumstances. We also check for any future clauses relating to annual fee increases or any extra costs involved.

Site Visit & Meet The Developer

We visit every site and meet the developers. This helps bring the vision of the development to life and means we can gain even more area knowledge, even after our thorough research. We can get real-time updates of construction and if the project is nearing completion obtain video walk-throughs of the properties.

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