The final piece of your property investment due diligence puzzle
The site visit is one of the most important aspects of your due diligence. This is your opportunity to see exactly what you are buying – and what your potential tenants will be renting. It is vital that you approach the site visit in a disciplined and rigorous way. In this article, you’ll learn the method that successful property investors use to ensure they are buying a property that will provide valuable income, and not cause months of misery.
Do you have to conduct a site visit?
The answer to this question is no, providing you have a team of professionals that you trust (and that has proven its worth) to conduct a visit to the site on your behalf. But whether done by you or others, a site visit is essential.
Be prepared for the site visit
You will need to do the following prior to your inspection:
- Take a notepad and pen to make notes.
- Print out a map of the area around the property (a 1-kilometre radius is fine). This will give you a good idea of the area surrounding the property.
- Take a camera – a modern phone camera is fine.
- Take a list of the questions that you would like to ask the agent (created from your research so far).
The value of building inspectors to ‘snag’ your properties
A lot of people take professionals along with them on at least one of their visits. They may take builders, engineers, surveyors, or other trade experts. The point is that these professionals know exactly what they are looking for. I always encourage people to do this. One piece of expert advice could save or even make you a fortune.
This is especially important when you snag a property – resulting in a snagging list, which outlines all problems with the property. You can use this as a negotiation tool, to help you get better discounts.
What to consider when you inspect an investment property
- Arrive 15 minutes before you are scheduled to meet an agent – you might get to see the owners directly and ask them unfiltered questions
- Second viewings (when those emotions have subsided) are always advisable
- Drive yourself to at least one of the visits, so that you can explore the area without having the agent manipulating your thoughts
- If the property isn’t up to standard in any way, you have two choices:
- Negotiate a better price so you can put it right
- Move onto another property
Inspect the area
Don’t think that an inspection of the ‘house and grounds’ will be enough. You may have done your area research on the internet and over the telephone, but this is also an opportunity for you to get a real feel for the area.
Be prepared to wear out that shoe leather! A walk around the neighbourhood can tell you lots that no amount of online research or questioning of agents will. You’ll be able to ‘feel’ if this is an area that will attract the good tenants you want to rent to. And this, after all, should be your goal.
I remember doing a site visit in Seaforth in Liverpool. I caught the train all the way to Liverpool and then took a taxi to Seaforth. I was negotiating on 30 new build flats at what looked to be a great price.
I arrived in the high street at about 8:30 in the morning. I got out of the cab and walked up the high street to the development site. Every second shop was boarded up. The supermarket was barely alive. The area was in massive need of regeneration. I ended up turning around and getting a cab straight back to the railway station and was on the train back to London by 9:15. Whilst this wasn’t the site – it was the area – the fact is that if it’s not right, it’s not right.
How to inspect an investment property
Always use a systematic approach when inspecting an investment property. Don’t let yourself be directed by the agent. These first steps to take will set you up for a worthwhile inspection:
- If it’s a new build property, establish contact and a good relationship with the team in the development site office
- Assess the time it takes to reach the property using different means of public transport
- Ensure there are no factors that might put off potential residents, e.g. unsightly or ugly buildings or businesses, police, fire or ambulance stations, etc.
- Talk to local rental agents and ask their honest view of the development and its likely tenant-ability
- Walk the local area and assess the proximity of key amenities, e.g. convenience stores, chemist, pub, supermarket, schools, parks, etc.
- Spend time in the locality getting a feel for the local culture/people, to assess likely attractiveness to the rental market
- Only inspect one room at a time, and finish before you move on to the next
Inspect the external property
I always start a site inspection on the outside of the property. Usually, if there is anything wrong on the exterior, it’s a lot more expensive to fix. It might even be outside my control. If the external is not up to scratch, or can’t easily be made that way, I can simply move on.
Start with the roof, then work your way down the walls to the foundations of the property. Extend your inspection to the boundary edges to the fences and walls, and across lawns.
Look for cracks, stains, mould and damp where foundations meet the walls and walls meet the roof. Inspect the garden for intact boundaries and signs of infirm ground.
Inspect the internal property
This is a process of walking through each room and systematically ensuring all is as it should be. Take all the time necessary to do this, and consider every element of every room:
- Living Spaces
- Studies (which are often just small rooms that need to be treated with equal care and attention)
- Reception rooms
What you will be examining in each room includes:
- Skirting boards
- Natural light
Get your site visit checklist
Using a checklist when conducting your site visit will ensure that you leave no stone unturned. It’s how we make sure that a property really will live up to its investment promise. To learn more, get in touch with Gladfish on +44 207 923 6100. We’ve helped hundreds achieve their lifestyle objectives with property. You could be the next.
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