Browse All Tribes or choose a Tribe below:
By signing up I agree to Property Tribes Terms and Conditions
Already a PT member? Log In
Sign Up With Facebook, Twitter, or Google
By signing up, I agree to Property Tribes Terms and Conditions
Already a PT member? Log In
Don't have an account? Sign Up
To reset your password just enter the email address you registered with and we'll send you a link to access a new password.
Welcome to Day 4 of our new week of themed content, here on Property Tribes, where we are looking at different business risks in the property sector and how landlords can mitigate them.This is all part of our year long "Smart Landlord" campaign, celebrating the 10th anniversary of Property Tribes and, hopefully, over the past decade, Property Tribes content has assisted landlords in avoiding the pitfalls by making someone else's hindsight their foresight and sharing tips on how to reduce risk.This graphic illustrates the process of risk mitigation in business:For this week, we have identified three main types of risk:1. Risk of financial lossThis could be through a tenant not paying the rent, buying a bad property deal, suffering void periods, interest rate rises, making poor business decisions, having a tenant on Universal Credit without having direct payment to landlord, a "black swan" event such as a major local employer shutting down.2. Regulatory riskThis covers everything from Government intervention, increasing legislation, and fines for non-compliance - which can be up to £30K. There are now over 180 Government statutes and regulations that landlords have to adhere to in order to provide a compliant and safe home for tenants.3. Rogue riskEncountering a rogue tenant, lettings agent, property trainer/guru, builder, or some other person or business you transact commercially with.Ultimately, all of these will result in financial loss, not to mention stress and emotional heartache, so smart landlords look to mitigate their risk at every opportunity. They know that prevention is ALWAYS less expensive than cure!One of the best ways to protect yourself against risk is due diligence.We have already talked this week about undertaking due diligence on tenants and lettings agents, so today we are talking about the wider due diligence process that can be applied to any company or individual you may consider undertaking a commercial transaction with.Due diligence is the process of researching a person or business before signing a contract. It is a process that mitigates your risk and is vital in every aspect of property investment where there is a commercial interaction.In today's instalment, we talk to Richard Bowser, Editor of Property Investor News, about business risks for landlords and the importance of due diligence in property:
As we mentioned in the video, putting an individual or company's name into google is one of the simplest ways to undertake due diligence.Remember that Companies House can also be used for DD on both companies and individuals and is a very useful resource ... and free to use, so there is no excuse!How to use Companies House for due diligence Some very simple things to check:1. Do the company communications have good spelling and grammar?2. Is the company number displayed on the company website? (Legal requirement).3. Is there a privacy notice displayed on the website? (Legal requirement).4. Does the website display the mandatory trade bodies that a business needs to be a member of? (Legal requirement).5. Are the terms and conditions clearly displayed?These are all very basic requirements and things to check and, if you do this as a matter of routine, not only will you avoid rogues, but you will also save yourself a lot of time!Due diligence process for trainers, mentors, and deal sourcersHow to do due diligence on a property mentor Due diligence or die: Lessons learned from the Madoff disaster Tribes guide to avoid becoming property "shark bait". Mentor, JV, property deals, and loans scamsAnti Due DiligenceHow to stay safe lending money & property JVs Golden rules when entering into a JV or loaning people moneyAnyone thinking of using a deal sourcer must read this.5 minute due diligence regime to research companies and deal sourcersTrust - How easily we are fooled.Capital at risk on FacebookDue diligence process for property deals:Property rental & price due diligenceComprehensive list of property due diligence sites.How to assess tenant demand in an areaRightmove vs. Zoopla - getting the most out of the portals for property researchNothing trumps local knowledge in property Masterclass in valuing a propertyAnatomy of a property hotspot - 12 indicators Anatomy of a profitable property dealIs proximity to good schools high on your list of BTL due diligence?BTL due diligenceAdvanced due diligence with 10 a month professional property buyerStacking a deal
Due diligence process for builders:10 tips to avoid cowboy buildersThe above links only really scratch the service.Remember that due diligence is not a personal process and you should not be fearful of asking pertinent and legitimate questions. If someone takes exception to that, then that is a definite warning bell imho.As well as being in "prevention" mode through the due diligence, smart landlords can insure against virtually every risk in property, and the Alan Boswell Group award-winning team are at PT members service to ensure they get the right level of cover. Call the ABG team on 01603 649736 .Another additional way to mitigate risk is to join a Landlord Association and take advantage of all their support services and training. Property Tribes is partnered with the Residential Landlords Association and PT members can enjoy 25% discount off joining.Surrounding yourself with people who only agree with you is one of the riskiest environments you can put yourself in the property sector.Getting a solicitor to independently check over a contract for you is also a very good risk mitigation tactic. Property Tribes legal partner, Anthony Gold Solicitors, have experts in property and contract law and can undertake this for you. Clifford Tibber is their partner that specialises in this work and can be contacted at clifford.tibber (at) anthonygold.co.uk or by phoning 020 7940 4060.Finally, another important part of your due diligence process should be to listen to skeptics and de-bunkers:The importance of listening to skepticsIf you are not an expert in due diligence, the skeptics and de-bunkers might be the only line of protection to stop you losing life-changing amounts of money.To see some of the stories of people who did not undertake sufficient due diligence, visit our "Landlords in Distress" tribe. Hopefully this thread has gone some way to ensure that you never have to post in that category!Catch up:Monday - the launch of week and looking at how landlords can insure against risk - with Alan Boswell Group.Tuesday - the importance of inventories with the Association of Independent Inventory Clerks and Inventory Base.Wednesday - mitigating risk through the use of a reputable lettings agent with David Cox, CEO of ARLA.Friday - Mitigating business risk by using verificationWhat other methods of due diligence do you use in your property business?SEE ALSO - How to vet a lettings agent ... 12 questions to askUP NEXT - Top tips for spotting a rogue tenantDON'T MISS - Due diligence for Landlords - a comprehensive guide.NOW WATCH:
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
Very interesting article here and a very useful website in general.Excerpt of article about due diligence:The problem is that “due diligence” is a much abused concept. Time and again you see people losing money because they think they were doing due diligence when they weren’t.
What they were actually doing is pseudo-diligence, i.e. something that <i>felt like</i> due diligence but <i>in reality</i> wasn’t.
Due diligence mostly involves independently verifying that the information given by the borrower is actually true.
Pseudo-diligence mostly involves letting the borrower ladle on more information without verifying that any of it is actually true.
Pseudo-diligence is a classic example of the Dunning-Kruger effect, which can be simplified as “thinking you are cleverer than you are”.Full/source articleBond Review also has some articles warning of scams, and some are from the property sector, so be sure to bookmark it!