With the market picking up and finance being more readily available there is a temptation to act quickly when an investment opportunity appears, however, Dave McKnight at Martin & Co Derby advises on due diligence:
‘Always remember the price needs to be right. When it comes to property investing, we are always being told ‘location, location, location’ is all that matters. It’s very important but in terms of ‘the deal’, price is your bottom line. You need to buy low so that you lock in some readymade capital and generate a decent yield straightaway.
Early on in your due diligence, you need to identify the price and use that information wisely. The first place to start is online. There are many websites offering quality information. We suggest you go to NetHousePrices.co.uk. Enter the postcode of the property you’re looking at. You will then see a list of addresses that have sold in the surrounding area and the prices achieved for these properties.
The most reliable data is about similar types of property that have sold in the last six months and are as close as possible to your target property. Bear in mind that some streets have a mix of, often quite different, properties. You should really be looking for three or more examples of ‘sold’ comparable properties and prices.
Check Asking Prices
Once you’ve got your recent data, go straight to www.rightmove.co.uk and enter the postcode of your chosen property. What you are now doing is to look at current asking prices. You might start your search by asking for ‘this postcode only’, identifying the property type, number of bedrooms and a realistic price range.
The results will give you an idea of what other people think their property is worth – but note that this is not always the same as what the buyers think it is worth. The asking prices are subjective and may not even be close to what the vendor is prepared to accept as their
Do Please View
Is it a practical place to live in terms of access to amenities? Are there any issues with the neighbours? Most important is the seller’s reason for moving. Are they a particularly motivated seller? Don’t be afraid to ask difficult questions because this is a serious investment you’re making and you need to know everything.
Go for a walk round the surrounding area. Are other properties in a good state of repair? You’re trying to establish if this is somewhere a tenant will want to live. Get a feel for the market value by comparing, say, the nearest three similar properties. Once you’re happy with your price assessment, this will be the starting point for your negotiations.