If you read my past few blogs, you might be a bit scared of the due diligence process.
That’s completely understandable, as due diligence can make you feel like Sisyphus pushing his rock up the hill. Just when you think you've got everything in place, the rock comes tumbling down and you have to deal with a bunch of new issues.
Look at me bustin out the greek mythology references… some culture must've rubbed off on me while I was cruising around mediterreainian the last couple of winters.
The good news is that there are a few things you can do to make this process run much more smoothly.
Here are three to keep in mind.
- Focus on the Numbers
So much of due diligence process revolves around numbers.
In fact, the most important aspects of the process involve them. There’s a good reason for this, as your success depends on those numbers and you’ll measure your achievements with them.
A vital piece of advice I have for you is to focus on nothing but the cold, hard numbers.
In other words, eliminate all emotions and don’t let them influence your decisions. Otherwise, you might settle for less than you deserve and sacrifice your success.
Getting emotionally attached to the property you want to buy clouds your judgement.
You might let some issues slide just so that you can get your hands on the property. Never do this as it will cost you a lot down the line.
- Take Your Time
Getting all the data you need to make smart decisions takes time and effort. Plus, it involves working with people who often have very tight schedules. As a result, you need to prepare well and take your time.
Don’t rush due diligence, as this can often result in inaccurate information.
This is particularly true when you’re doing your own research aside from liaising with an agent or solicitor. The moment you’re ready to buy, you should have the confidence that you’re making the right decision.
Besides, proper due diligence can tip the negotiation scales in your favour. You’ll know everything about the property, which means you have leverage when you get to the negotiating table.
- It’s Never Done Until It’s Done
Due diligence starts the moment you see a property. And it doesn’t end when you’ve signed the contract as generally you will have at least a 30-day due diligence period. This means that there’s always time to get more information and get all your questions answered.
I advise you to take full advantage of this.
You can act on your due diligence right up until the end of the process.
For example, some new information may come to light during negotiations. You absolutely can, and should, use this information to negotiate new terms.
Before the due diligence period is finished, always have a final review of the numbers. And have your accountant and lawyer go over everything too. If you see something that doesn’t look right, change it.
Of course, the other side might not always agree with everything you want to change.
If you feel like the deal isn’t good enough, simply walk away. There are more than enough deals out there, so you don’t want to get stuck with a bad one.
The above advice should make it easier for you to do due diligence and get the deal that meets your needs and goals. The best thing is, there’s a lot more that you can do to get all the information you need with less hassle.
To learn more about the due diligence process, sign up for my webinar.