How To Do Due Diligence When You Can’t Tear Down Every Wall
As a buyer, doing your due diligence is one of the most critical tasks to be done before completing the transaction. While you want to be as thorough as possible, there are simply some limitations that won’t allow you to. However, there are still ways for you to do due diligence in order to equip you in making a well-informed decision.
Inside the property
You don’t have to tear down every wall in order to assess the current state of the property. Hire a licensed inspector do a professional and thorough inspection. The inspector will be able to unearth problems such as water damage, structural defects, burst pipes, and faulty wiring.
Outside the property
If an inspection inside the property is not possible at the moment such as in the case of an occupied foreclosure property, you can still take note of issues from what you can observe on its exteriors such as the landscaping, the drainage around the property, and the neighborhood where it is located. The state of the neighborhood can affect a property’s value, especially if there are several abandoned and unfinished buildings in the area.
Make your inspection comprehensive by including the positives as well. Good schools, access to public transportation, flourishing local businesses – take note if these are present in the neighborhood.
The property’s legal status is as important, or even more, as its physical condition. Review the title of the property, making sure that the title is clear and that the property is indeed for sale. Find out as well if there are other issues such as tax liens or other hidden liens. Be aware of any obligations that come with the property, and whether the current owner should resolve these issues first, before completing the purchase. The unpleasant surprise of being encumbered by an unforeseen legal obligation will take away any feeling of accomplishment in acquiring a new property.
For future landlords
If your intention for purchasing a property is to rent it out after, you’ll have to consult with your insurance agent as well to find out the cost of your liability insurance and property insurance. Insurance costs will be different if you are going to rent out the property compared to residing there yourself.
As a future landlord, you also need to know the zoning requirements of the area. There could be laws or ordinances in place that don’t allow property to be rented out or have a limit on the number of rentals allowed in the area. In some cases, the limits could also be on the number of people allowed to occupy a room or a house. If your plan for the property includes offering room-share tenants, find out first if it is allowed.