Wednesday, 19 October 2016

Most people who have lost money in real estate did not do as much due diligence as they should do. Never wave your due diligence. Don’t ever think that you can wish it away. No matter who may be introducing the investment to you, regardless of the respect you have for the person.

If you adhere to this particular instruction, you will save yourself a lot of headache in real estate. There are some people who bought properties, and do not even know the location of the property. When you ask them, they tell you ‘my good friend introduced it to me’. Such deals could be highly risky. Some people have bought into real estate investments without even visiting the company involved or finding out about them. They wake up years later to realise that their money has gone down the drain. Their refusal to do due diligence has cost them the money. When investing, you must have something at the back of your mind.

People selling are usually in about two categories, they are either positive or negative people. Your fate is sealed when you fall into the hands of negative people, because they usually set out to defraud you. Even at that, dealing with positive people does not safeguard your money. Your money can still go down the drain with people who are positive in the business, sometimes with their own money too.

By doing due diligence, you will not only be saving yourself a lot of trouble, you will also be saving people you are trusting, or people who have trusted you (as the case may be) a lot of trouble. The people that are most interesting to sell to are those who ask lots of questions. Don’t go into business with sentiments. People who say ‘I don’t need to ask too many questions, after all we are friends, he can’t dupe me’ are people who are not ready to take responsibility.

Experience has shown that it is this kind of people that will return after a few years to tackle what had already been in the contract for so long, but he didn’t know about it because he didn’t see the need to ask questions or read about the investment. Such people make big scenes, crying foul that they are being extorted. All these happen because they passed off their due diligence in the first place. (Vanguard)