Not doing enough research and due diligence

Investments are big decisions, and they can go tragically wrong if investors don’t spend enough time doing their due diligence and researching the market.

Many investors use property investment companies to help advise them on what and where to invest. Whilst this can help people who are unfamiliar with the process, it is still critical that the investor double checks any suggestions from the investment service.

Make sure they provide multiple independent sources of price data and suburb information, so that you can verify what they have been told. Once you have this data, do your own research. With so much data at your fingertips this is relatively easy to do.

Here are some key data points to look out for:

  • The median price: Not just the current figure, but also how it has fared over the previous 12 months. Also, how does it compare to surrounding suburbs? An area that is significantly cheaper than its surrounding suburbs may indicate imminent growth.
  • Recent sales: Studying the most recent transactions will give you the most up-to-date information on prices in the area.
  • Vacancy rates: High vacancy rates can indicate a less desirable area, which could make it harder to find tenants and sell in the future
  • Future changes: If there are any scheduled or proposed developments in the area, you need to know about them. A new school or refurbished amenities could be beneficial to the area’s value, while rezoning or commercial construction could be harmful.
  • Expert opinions: There are a number of professionals that offer tips on up-and-coming suburbs via blogs and market reports. Just be wary of any potential biases they might have.
  • Local council: Get in contact and see if there are any planned major council developments and infrastructure projects. While this may seem like a good thing at first glance, it is important to determine whether this infrastructure boom is a result of planned growth in the area, or whether the growth has already happened and the infrastructure is just catching up.

A final tip here – if you are using a professional investment service, make sure they provide everything in writing before you jump in and buy.

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