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Why Due Diligence is a Must for Property Investors

Jul 12, 2017 | Emerging Trends Advisors

When you are considering investing significant sums of money in anything you should always do your research but when it comes to property, and perhaps even more so when investing in property abroad, this is essential.

You should collate as much information as possible and this can be through speaking to different people, searching on the internet and maybe even using your gut feeling. No stone should be left turned and you certainly shouldn’t be taking any short cuts. This research is what is commonly referred to as due diligence.

Due diligence should be conducted long before you sign any paperwork and definitely before you make any payments. Some may argue that it is wise to begin the whole process before you start searching for individual properties so you know exactly what you are looking for and what you should be vary of. Due diligence should be continued until contracts are finally exchanged and all transfers have been completed. Trying to rectify problems after the event is simply not an option and will only lead to heartache.

If we assume that you have already done some research into the potential properties that you are interested in, the next stage is a visual inspection of the property. Obviously, this may be impossible if you are purchasing remotely, but in normal circumstances this stage is an absolute must. From the visual inspection, you will get an idea about how the project is progressing. Are there workers onsite, are there any obvious problems and does everything seem ‘normal’? These are all questions that you should be asking although caution should always be taken as appearances can be deceiving.



Why Due Diligence is a Must for Property Investors

The purchase of ‘off plan’ condominium units is common practice in Thailand and is indeed a great way to get a fantastic deal. However, there is always a potential risk in doing this and you need to minimise this as much as possible. Check to ensure that the developers have already obtained the necessary licenses and that the building meets the latest legislative requirements. If the licenses were obtained several years ago they may no longer be valid or alterations may need to be made. It is worth noting too that in some regions of the Kingdom, condominiums are forbidden although this hasn’t stop some unscrupulous developers from trying.

In connection to the points above, it is worth including checking if the developer’s Environment Impact Assessment (EIA) has been conducted. This includes information submitted to local government and the Ministry of Natural Resources and Environment – in laymen’s terms, this document means that the developer is actually allowed to construct the building. However, just to check that this has been granted is not sufficient, you also need to check that the developers plans and the EIA certificate tally – are they going to build what they are legally entitled to build?

If you are satisfied to this point then you have nearly finished conducting your due diligence. Finally, it is worth noting that Thai law requires there to be a certain number of parking spots and communal areas available at new developments so make sure that these requirements are met. Remember due diligence is about protecting your interests and is a crucial part of the purchasing process.

Article Source: www.angelrealestate.co.th

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