Three Tips to Simplify the Due Diligence Process

Due diligence is an integral part of any real estate investment. Performing due diligence ensures real estate investors know exactly what they’re in for with a property. Buying a property can be costly. The correct information is essential when making an important decision.  In simple form, due diligence involves the examination of every aspect of a property that could affect its suitability or value. In this article, we share three tips that may help real estate investors during the due diligence process.

Do a Title Review

Title reviews are fundamental to the due diligence process.  A title review is like a background check for a property. When an investor is considering acquiring a property, the title review process confirms the seller owns the property and provides an overview of all rights affecting such property. Investors should also get a preliminary title report on any foreclosure property they’re interested in buying and look for any secondary liens or tax liens. This may help investors know that there are no hidden liens or encumbrances on the property that could turn into unpleasant surprises later.

Inspect the Investment Property

Property inspections are an important part of the due diligence process. Real estate investors may have a licensed professional inspector examine the house for structural defects, water damage, or other significant problems. Pest inspections are also reasonably standard for termite damage. Electrical inspections are suggested for older properties that may need rewiring after many years. Lastly, plumbing inspections will check for sewer leaks and drainage issues.

Analyze the Location of the Property

The location can significantly affect the value and desirability of the property. As such, due diligence includes looking at the environment and location of a home. Real estate investors may get to know the areas they’re considering buying in. Driving around the neighborhoods, looking at other houses and people who live there, and talking to residents may also help to understand if property values are going up or down. It’s also a good idea to check out crime rates in areas looking to buy. These factors can significantly impact which markets to buy and which to avoid. These tasks are part of the due diligence, even before making an offer on a property.

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