In real estate there is usually the due diligence period when you are given time and access to the property to do your research.
Most amateurs do not ask for or make thorough use of the due diligence period.
It is important that you do due diligence whether you are purchasing a 600 million naira apartment in Banana Island or a 200,000 apartment in your village. Before you close the deal is the time you should glean out every information you can get.
These are 4 categories of things you should check
- Check the Physical Property.
Not so fast. It goes beyond checking if the compound is tiled or the exterior is well painted. You need to look beyond that. When buying real estate, do not rely on perception or information handed to you by the seller. You confirm by getting experts to take a closer look- from plumbing to wiring to everything that is of significance and may cost a lot to fix. This is important because a little fault may hurt the value your investment .Check it the way you would (hopefully) check out a second hand car.
- Check its history:
Would you buy a home with a dark history? Or one that has a history of getting flooded? How would you know if you don’t check its history?
- Check the potential future of Revenue;
Just because a property is in a certain part of the Lagos or Abuja does not immediately make it a perfect property. Check future potential. Is the value of properties in the area climbing or slowly declining? Are there any plans by the government to make changes in the area that would affect the value of property in that area?
Do due diligence to be sure of these things.
- Check Operating Expenses:
In real estate, operating expenses comprise costs associated with the operation and maintenance of an income-producing property, including property management fees, real estate taxes, insurance, nd utilities. Non operating expenses include loan payments, depreciation, and income taxes.
Don’t be the guy that purchases a property and watches it gather dust because he under-estimated operating expenses or the dude that gets his property snatched from him because he could not complete – payment.
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