Due diligence when investing in property

Hello everyone,

I'm a relatively new property investor. I just recently bought a unit in Cabramatta. This was about 3 months ago and I bought my unit out of pure luck, without really knowing anything about due diligence or approaches to buying property for $210K.

The unit is 2 bedroom, 1 bathroom, balcony, brand new 120 m2! Now there are other brand new units in the block that are exactly the same and the price for the same comparable units is around $240K! Can you believe it? This is a 14% increase in just 3 months!

Are there any share holders out there? Please tell me when the last time you made 14% profit on a stock was? Come on, please do tell!

OK, so I did also mention that I lucked into it. because I had a tip from a friend who lives in Cabramatta that the block was being eyed for major renovations and developments. Yes, I was lucky but you too can do this if you exercise due diligence before the purchase of your home to ensure you're getting a good deal!

Would anyone out there like to share their methods? What's the first thing you look at? The demographics of the neighbourhood? The cars in the neighbourhood? probably wouldn't want too many beat up looking cars as this seems to signal that things are on a down slide. I used to think that the move of gay people into a neighbourhood was sure signs of gentrification, especially in the inner city dump neighbourhoods. So what are your methods? How do you pick them?

Thanks for sharing!

Al B.

Hello everyone,

I'm a new participant in this forum and I would like to thank you for having me. I saw some posts on whether it was a good idea to have a property investor mentor or not and I would just like to say that I've signed up to Dymphna Boholt's property investment boot camp programs and haven't looked back!

It's definitely very useful to have a property investor mentor if you don't have access to people who understand finance and have the know hows when it comes to investing your money. Buying property is a very personal thing and many people will approach it with emotion rather than logic. Unlike investing in the property market, with property (real estate) you can see it and feel it and as such people become very emotionally attached to it and don't see it as just an income generator.

It's very important to exercise careful thought when buying a property. You have to ensure that you're buying the property for the right price at the right location.

Diligence includes other issues such as legal planning, examination of financial resources and tax planning.

One of the benefits of having a mentor is that he/she can give you access to a network of professionals who will structure your finance so you can't lose money by getting sued or losing an insurance claim if something goes wrong. You need a good accountant to take care of your taxes, a good mortgage broker for getting you the leverage and a good financial planner if you choose to add property to your SMSF portfolio.

It is valuable to get the right advice and legal structure in place before entering into contracts to buy property and avoid costly mistakes.

So while it is not necessary to pay for the services of an investment mentor, it is absolutely necessary for you to understand that you need a network of professionals like accountants, solicitors and mortgage brokers to keep you safe from getting into deep financial trouble.

I hope this has been helpful for those of you looking for answers.