A Simple Guide to Practicing Due Diligence
Regardless of what you are purchasing, real estate or otherwise, practicing due diligence should be of the utmost importance. We’ve all been there at some point, excited about a new purchase, later to find out that it wasn’t what it was made out to be in some way or another. This is not a situation you want to find yourself in as a real estate investor!
If you are unfamiliar with what due diligence is, it can be summed up with the word research. When it comes to practicing due diligence in the real estate business, it simply means to find out everything you can about the property and the surrounding community. It involves fact-finding that can be very time consuming and tedious but will ultimately paint the picture of whether or not a specific property is a wise investment.Â
Here are just a few things you want to find out while researching a property (there are more):
- Before you purchase any property, make sure you gather sales and ownership information. Your local tax assessor or recorder of deeds office should be able to provide the information you need for this purpose.
- Municipal records will tell you if and when a property owner has applied for rezoning or land development approval.
- One bit of information that is often overlooked is to find out if there are any approved land developments or new community construction plans near your potential property. This includes any new highway projects. You can find this out by contacting the local municipality office or land development offices. This is crucial to researching future property values.
- If you are purchasing a home off the beaten path, make sure you look at your local floodplain maps available through FEMA. You should also contact the municipal sewer and water authorities in your area to see whether or not your property can be serviced by public water or sewer.
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