Five Reasons You Need to Understand Due Diligence & Be Involved

You may have noticed this article is not titled Five Reasons You Need to Do Due Diligence. I’m going to assume you already know you should be doing your due diligence before any investment. Though, you may be asking yourself, “Why do I have to know this, as my buying agent, broker or partner knows all of this?” I implore you to learn about the due diligence process during your next investment purchase. Not every broker, agent or partner knows everything and pardon the cynicism, no one is going to look out for your investments like you. Besides, I’d like to show you additional reasons why you should be actively involved in the due diligence process.

I love “top five lists” as much as the next guy. Here are five reasons why you need to understand due diligence on investment property purchases & be involved in the review process:

1. Lead your team with knowledge. You will be better able to explain to your partners and investors what is going on during the due diligence phase, thus being more capable to assist and lead your investment team on buying and selling options.
2. Find Hidden Problems. Conducting your due diligence correctly will allow you to determine hidden problems before you must spend (sometimes significant) investor resources and time to fix the issue.
3. A Penny Saved is a Penny Earned. You have the potential to find value add opportunities the seller didn’t find while also having the potential to avoid a costly lawsuit based on negligence, because you will be actively discovering issues during the process.
4. Opportunity Costs. You may be able to discover an issue or deferred maintenance that the seller did not disclose which allows you to exit the deal quicker and get to your next opportunity (saving time and money).
5. Be the One Who Everyone Can Count On. Who do you think your partners and investors are going to call upon next time they are thinking about doing a deal? You. They will know you are truly on their team. You are a true supporting partner they can count on that isn’t there to partner with mere money or a license, but actual supporting knowledge that many partners do not have or attempt to give.

Those were five reasons and there are more, nevertheless I think I’ve made the point clear. Knowledge is power and you should always seek it out as it’s something that no one can ever take from you.

Here for you in success.