You can never do enough research and due diligence prior to making a purchase.
And just when you think you’re good at it, there’s always room to improve.
Due diligence involves ensuring the property you want to buy has no hidden secrets that could make a sweet-looking deal turn sour. Knowing where your easements are, where future roads are planned and who actually owns the property, are all critical pieces of information for the purchaser.
I now have something new to add to my list.
Everyday Property Investing podcast fans will know that I recently bought property interstate. I did my research, hired a professional to help me with legalities, checked all the documents, and had independent experts look the property over. I was set! I hired a property manager who really knows her stuff. I found what seems like a great tenant. All was going well.
As the tenant was about to move in, in the middle of winter, he discovered that there was no gas meter. No gas meter means no gas. No gas means no hot water and no stove. No hot water means no tenant anymore. And it means an eight-week wait to get one installed!
I was left scratching my head, wondering why nobody had noticed that there wasn’t a gas meter. The lesson to be learned here is that there are some features that nobody checks – people just assume certain features are there. Gas meters, for example, were not on the list I provided my inspectors, nor was it on theirs. Here are some “obvious” factors you want to ensure you’re on top of:
- Does the house have gas hot water, heating or cooking?
- Check that gas has been connected to the property.
- Check that all of the applicances have been tested by a certified professional.
- Check that you have a gas meter.
- Does the property have its own water meter?
- If you purchase an apartment which has a shared water meter, you will need to pay all of the water bills for the tenant. If the property has its own water meter, the tenant will be responsible for paying the water but you will still need to pay connection fees.
- Are there any future roads planned on your property?
- You will not be able to build within a certain distance of the area set down for compulsory aquisition.
Hopefully my experience will help make you an unbeatable due diligence expert!