Performing thorough investigation significantly contributes to informed decision making by enhancing the amount and quality of information available to decision makers. Due diligence allows to uncover potential worst-case scenarios and develop strategies to mitigate the risk.
Engage in critical thinking
The due diligence process should follow standard best practices to avoid adverse consequences. Due diligence is multi-form and should be applied at every level of the investment program: from the developer’s acquisition staff to the investor.
It’s the moment to ask yourself if the expert is really A-class, and if you chose your advisors wisely, not on a discount. Healthy skepticism will keep your investments in good check.
The steps of due diligence
The due diligence team needs to test the assumptions formed on the basis of disclosed information.
- Business and legal due diligence
- Analysis of titles, surveys, contracts, liens, warranties
- Examination of financial records
- Insurance review, bad actors and penal records check
- Project due diligence
- Physical review (photos, movies, maps, aerials)
- Engineering (structural, electrical, mechanical, environmental)
- Architecture (plans, drafts, rendering, specifications, accessibility)
- Municipal approvals (zoning, land use, maps, permiting, licenses)
The perfect profile
Select the Real Estate development team wisely. Investors rank the necessary qualities they should display:
- Spotless reputation and historical investment program record
- An established continuous record of timely and worry-free deliveries
- A proven strategic vision and flair for exceptional opportunities
- Superior research and due diligence staff
