Risk & Due Diligence

The Due Diligence Checklist

Every property purchase should go through this checklist before you commit. Skip any of these and you are gambling, not investing.

Property-level checks

• Building and pest inspection (non-negotiable)
• Strata report (for units — check the sinking fund and any special levies)
• Flood and bushfire zone check
• Council zoning — is higher density development planned nearby?
• Title search — encumbrances, easements, caveats
• Rental appraisal from a local property manager (not the selling agent)

Suburb-level checks

• Population trend (growing or declining?)
• Employment data (what are the major employers? Is the economy diversified?)
• Vacancy rate trend (rising vacancy = oversupply signal)
• New supply pipeline (how many new dwellings approved in the last 12 months?)
• Infrastructure commitments (transport, hospitals, schools)
• Crime statistics relative to state average

Red flags

• Vacancy rate above 4% — oversupply risk
• Median price decline for 2+ consecutive quarters
• Single-industry town (mining, tourism)
• High proportion of investor-owned stock (>40%)
• Developer-heavy area with large off-the-plan pipeline

Decision framework

• Have I completed every item on the property-level checklist?
• Do the suburb-level metrics support the price I am paying?
• Are there any red flags I am choosing to ignore?
• What is the worst-case scenario, and can I survive it financially?
• Have I sought independent advice (not from the selling agent)?