Trusting finder's and their Due Diligence ?

[OZInvestor]

G'Day !

I am based in OZ. I have big plans to buy IPs in NZ but one of the major issue I am facing is finding best property finder. How to trust which one is best. I tried to search about finders here on PT but no such review or information.

What level of DD finders do and what level of DD I should do. Please suggest, it is really stopping me to buy IPs in NZ.





Note:
1. No offense to finder's and their service. I respect them and their service. I am just doing my DD for my peace of mind and to buy IP's. Your suggestion welcome on my post.
2.To finder who is talking to me via PM, please don't take my this post wrong. I am just doing my DD which will give me peace of mind to buy. Your suggestion welcome on my post.

[Matt Gilligan]

I would suggest no matter how good the due diligence from the property finder looks, independently do your own DD on their DD.

An independent valuation and building report is a must. And get a rental appraisal from someone independent, and try to get an understanding of the capital growth potential of the area. No point in investing over the long run if you do not get growth. Many parts of NZ are overvalued (IMHO) and will not grow as fast as the main centers. Don't be lured into the small centers, unless there is a VERY good reason.

My advice is put your money in
1 Auckland
2 Christchurch
3 Hamilton
4 Tauranga,

in that order.

Best strategy is put it all in Auckland, because most of the internal migration and immigration goes to Auckland. The other listed areas also have good capital growth stories based around population growth, which is the fundamental driver I am interested over the long term as an investor.

Hope that helps.

Your accountant or lawyer over here should be able to introduce you to relevant real estate agents and service providers to independently check the finders reports BTW.

[SuperDad]

Always do your own DD.

If you can't trust, don't buy. Don't trust blindly.

Spend $2K on a flight here to eyeball the property and the finder, and to spend a couple of days on thye ground doing your own DD.

[ambitious]

Matt G has got it to a tee....get an indep valuation, get a feel for the area yourself, Akl would be top of the list....all the best...

[Bluekiwi]

I have bought a property thru a finder and also looking at finding property for people as well.

Although I never intended to use a finder, but I was presented an offer that was too good not to take up.

I am on several finder mail lists, and I dont see there being any DD at all, why would there be ?
All they are going to give you is a rental assesment, and a RV to tell you how great the yield and how much under RV you are buying it for.

I am pretty sure there is no requirement or intention to do DD on property.

Unless you can eye-ball it yourself, and know what to look for yourself.
Not buying in your home town where you can view first hand is a serious disadvantage:

1. You need to develop a relationship with a finder as the good deals arent usually advertised, and you can trust them.

2. A building report or a builder who can go and at least view for you, the difference in price being $600 to $100.

3. Local Knowledge - I would stick to one area of NZ and at least put some internet search's out and view everything daily that comes out and doing this you will see a pattern and get a feel for the dodgy area's and the lemon properties that keep popping up.

I never intended to be a finder but when you are looking at property day in day out there are just too many good deals to take them all yourself.

Right now is a good time to buy in Auckland in the rental regions as a lot of NZ investors are holding back waiting for the May budget, and mortgage sales are still at record levels.

4. Learn to do as much DD as you can online - council site, google maps, create a little mini dossier of your potental investment, and post on here if you have a query on a specific street (there are some specific gang streets you want to avoid)

[Bluekiwi]

Matt G has got it to a tee....get an indep valuation, get a feel for the area yourself, Akl would be top of the list....all the best...

If its a reputable valuer the finder uses you dont need to waste your $500 on this, and if you become expert in an area you dont even need that.

What I would be careful about are the finders assumptions and calculations on yeild.
The rental assesments many promote seem over the top to me, I think this is partly because its easy to get a property under value, but trickier to get a good yield - unless its undesirable in some way (location, right of way, crosslease).

They use phrases like "should get rent up to" now what the freak does that mean, not much.
Or dont include the assignment fee in the yield calculation !!!!!!!!

Or say things like "spend 10k and add a bedroom" or you "could add a minor dwelling and achieve 12% yield".
Be very careful of these sorts of statements and this is what you would need to do your DD on.

[PC]

If it walks, talks & acts like a real estate agent...
We all trust everything they say don't we???

[Puff]

Great comments Matt G and Blue Kiwi. I am one of those finders that you are talking about, by default though, was going to stop but have had a few investors coming to me lately so I can find them what they want. I just spent a few days meeting up with some of them in the Christchurch region so they knew who they were dealing with, meet some fantastic people.
Anyway adding to the above comments about things I don't like about some finders/or I should say things to watch:
- I hate potential rents - I like working in actuals. Yes there may be the odd one but...
- Not having/talking to other Property Managers to get a feel for the place if unsure of an area.
- Not having enough information to back up values etc.
- Maximising everything, rent, prices.
- Not leaving much in for the buyer.
- Not caring about the results the Investor gets.

Agree with Bluekiwi, if you get a very good Finder you can save some money, but at the end of the day it is your call so do DD yourself if the finder can't fill all the gaps for you.

What I like? a buyer last week going to do final check of property before he brought contract off me, he looks and rings me and tells me it is even better than he thought.
What else? passing on properties that are all of a sudden are getting better rents than I advertised, have another at the moment. I want repeat clients if I want to continue to do this.

Anyway some thoughts, and yes to some out there I have tried to put my case forward a little but I also know the pitfalls. I have previously brought from finders myself with great and not so great investments coming out of them.

Do your research on the property.
Do your research and get references from clients of finders.

Good luck OZ Investor
Regards

Mark

[Niall]

G'Day !

What level of DD finder's do and what level of DD I should do. Please suggest, it is really stopping me to buy IP's in NZ.

Oz Investor,

The only due diligence worth trusting is that you have paid professionals to do yourself.

Building Inspector $400 plus
Valuer $450 plus
Property Manager Free (so get a few of them)
Check council archives $25 to look


What mad hatter reason is Wellington not on the list of places to invest in Matts post?

There must be a bus load of cash positive Wellington investors reading these forums? No?

All the best,

Niall

[essence]

There must be a bus load of cash positive Wellington investors reading these forums? No?

Yes, there is Niall..... and we're being very quiet about Wellington. Why share the good deals with out of towners!!

[WGN ex-property manager]

Yes, there is Niall..... and we're being very quiet about Wellington. Why share the good deals with out of towners!!

Because they pay us finders fees, then come back for more?

[WGN ex-property manager]

Oz Investor,

The only due diligence worth trusting is that you have paid professionals to do yourself.

Building Inspector $400 plus
Valuer $450 plus
Property Manager Free (so get a few of them)
Check council archives $25 to look


What mad hatter reason is Wellington not on the list of places to invest in Matts post?

There must be a bus load of cash positive Wellington investors reading these forums? No?

All the best,

Niall

Agreed.

A Property Finders selection process is about filtering the market into a few very strong possibilities. The finders research will offer you possibilities that are almost certainly worth the cost of Due Diligence, but the finders work is not actual due diligence (even though a lot of the same data and reports go into it).

Do your own due dilligence! If you buy it, and it turns bad, it's your problem, so you need to make an informed decision based on independent advice. Even if the Property finder is a genuinely good person, they have a conflict of interest (ie they only get paid if you buy), so a professional property investor should never rely solely on the advice of their property finder.

To summarise - a deal offered by a good finder is a possibility that's worth the Due Diligence effort and cost. It is NOT A PROMISE!