This week it’s due diligence all the way, as we discuss how you can analyse any property investment that comes your way.

In the episode, we talk through a 4-stop process for getting to the bottom of whether a deal is worth pursuing:

  • A “quick check” list to make sure it’s worth going further
  • Internet-based research
  • Phone research
  • Visiting in person

On the quick check list, we have:

  • Is the property in or close to a major town or city?
  • Do the numbers roughly stack up based on your criteria?
  • Does Google Street View throw up any nasty surprises?
  • What is your gut telling you?

Then a whole lot of internet-based research:

  • Check Rightmove to ascertain current asking prices
  • Look on Rightmove to check current rental asking prices
  • Use the rarely used Include Sold STC button when doing a Rightmove search
  • Check the land registry to find out the price of recent sold properties
  • What (if any) investment is planned for the local area ñ This could boost
    rental and property prices.
  • What are the local unemployment levels, are they higher or lower than
    average?
  • What is the areaís credit rating, will your tenants be a
    safe bet?
  • What are the local transport links like, where is the nearest train station and bus stop?
  • How near is the local hospital? Always a great source for tenants
  • Is there a university nearby? ñ Another potential tenant source
  • Where are the local primary and secondary schools? Families will care.
  • How far to the local convenience store ñ Is there easy access?
  • Where is the local supermarket?
  • How far is your nearest international airport?
  • If the property is not in a major town or city how close is the nearest one?
  • What is the travel time to the nearest major town or city?
  • What size is the property, how does it compare to others in the market?
  • Is parking off road or on road?
  • Is the property freehold or leasehold
  • If leasehold how much does the ground rent cost.
  • If leasehold how much does the service charge cost.
  • Do you need to spend money on the property to get it into a lettable condition?
  • When was the property last renovated? Think electrics, heating, etc.
  • What size is the garden? Will your tenants be willing to look after a large garden?
  • Can you add value to the property?
  • If it is a new build property or off plan does it have an NHBC certificate or equivalent?

Then get on the phone and call some local estate and letting agents:

  • Mystery shop your local letting agent, how do they treat potential
    tenants?
  • Negotiate on the management costs they will charge and add figures to
    your cash flow
  • If the property is not let, what can you expect in rent?
  • If the property is let, who are the current tenants, how long have they lived there and are they good payers?
  • Will you need to furnish the property to get it let? If yes add the cost to your cash flow.
  • What type of tenant is your property likely to attract?

And finally, visit the area if you’ve ticked enough boxes:

  • Walk the streets around your investment
  • Walk to the nearest transport links
  • Visit the property

No property is going to be perfect – we’re yet to find a property next door to a hospital, school, university, supermarket and international airport – but by asking yourself all these questions, you’ll make sure you don’t miss anything glaring. From then on, it’s all about your personal priorities and what’s most important to the tenants you want to attract.

Resource of the week

Not just one resource of the week, but 15 – courtesy of 15 alternatives to Rightmove listed in this article that appeared in the Guardian. Thank you to listener Andrew Ayim for sending it our way.

Rob B also mentioned that he’s experimenting with Bulletproof Coffee – full report to come in future weeks. If we can scrape him off the ceiling.

This week’s news

Sure, you could get a one-bedroom flat in Mayfair – or for the same rent you could rent this entire island, with its own chapel, jetty and extensive grounds.

Dealbreaker though: you’re not allowed to land your helicopter on the island. But then you can’t do that in Mayfair either.

Tell us what you thought of the show!

Are there any other factors that you consider as part of your due diligence?

Has a bit of research saved you from making a bad buy in the past?

Let us know in the comments!

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Full transcript