The 4 Essential Questions that Property Investors Should Ask… But Don’t

With more stories of the Morris Properties scam still emerging in the last week or so and more and more people jumping on the bandwagon with complaints against various companies, it is about time that the investor took the advantage back. After all, it is your money that you are spending when it comes to any property investment so it will only be you who suffers if it all goes wrong.

In fact, although blaming the company that sold the property seems to be the thing to do at the moment (and in a good few cases, the correct thing to do as well), there is one thing all investors can and should do for the sake of their investment and peace of mind - ask questions. Too many investors do not ask any questions at all, and those that do rarely ask the right ones.

Whether you happen to be buying property at home or abroad, you should persist with your questions until you are completely satisfied with the answers. There are four essential questions to ask before putting a firm offer on the table:

What scale is the development?

If you are planning to buy property as an investment, then the answer to this question is essential knowledge. It is very also relevant to those buying a new personal home just in case they ever want to sell it. At any given time, 10 to 20% of the property in a typical finished development is either up for sale or available to be rented. If your potential home is on a plot of land with 1000 other units, you may find that it takes a lot longer to sell or rent out than if you had property on a plot with 100 other units. Of course, it is all relative to the particular case, but failure to consider this point carefully could lose you an awful lot of money in the long run. Sometimes, the smaller the better, although that’s by no means a hard and fast rule.

How experienced is the builder and where could you see an example of his work?

There are so many cowboys around today that most potential investors stress about how well the properties will be built. Will they be of good quality? Will they be safe to live in? Will the properties be structurally sound for the next hundred years? You need to know the answers to these questions and the only way to reveal the answers is by looking at the building company’s previous work. You should ask to see at least two properties and try to talk to the people who own them as well. If your builder is not sound then neither will your house be!

Have the people local to the area bought any of the properties?

The best people to ask about the success of a property development may not be in the building trade, but do have great knowledge of the area - the locals themselves. Locals will usually buy new builds if they are worth the money that is asked for and can be a very helpful source of advice. If the local people will not touch a new development with a bargepole, then you need to find out why because this will affect the profitability of your property if you plan to sell or rent it out. Make sure that they like the property, are buying into the development, and are happy with it being where it is!

Are actual sales living up to the extent of sales projections?

Sales projections provide the overall level of success that each property development achieves. All new builds are generally in demand and will get close to target if they do not manage to meet or exceed them. If sales projections are not being met though, there is almost certainly some kind of problem with the development. It may be that the advertising has targeted the wrong audience or that people have to meet certain criteria to qualify for purchase. Both of the above ‘excuses’ are unlikely but not outside of the realms of possibility. What is more probable however, is that there is a problem with the site or the property development itself, in which case the building company in question should not be trusted with your money.

Asking the four questions above will definitely help you to weed out the good investments from the bad and get you the investments you deserve instead of twenty or more years worth of heartache and financial difficulty.