Buying a property requires you to make informed decisions - that means you need data to work with. And here lies the challenge for most investors. They get excited about refurbs, increasing the value and finding tenants, but doing the research prior to purchase can be hard graft.
In a perfect world you should know:
If you haven’t done your sums how do you know if the deal is profitable? It only takes your calculations (guesses) being a few pounds out to turn a profitable property into a white elephant.
Compare like with like
If you’re looking at similar properties you’ll need to know that they are:
For instance: it’s not a good comparison to match a house that has been converted to an HMO with a family home - even if they’re identical buildings from the outside. If a property is a licensed HMO its value could be very different to a normal 4 or 5 bed property.
Buy to let or buy to sell?
Due diligence is just as important if you’re operating a flip strategy, buying below market value and selling at a higher figure. If your estimates are a bit out, you could end up being out-of-pocket if you can’t achieve the price you want.
Of course, no investor goes into a deal expecting to make a loss - or even to only break even. It’s a business and the aim is always to make a profit. Estimates or guesstimates are not good news. Always do your homework. Due diligence isn’t an option; it’s essential.
You can learn more here: