Due diligence is time-consuming – but ignore it at your peril

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Investors and landlords have been urged not to skimp on research and detective work when sourcing new business opportunities in order to prevent falling victim to scams.

Louise Reynolds, director of Property Venture whose firm helps expats and professionals through a bespoke property sourcing service, tells LandlordZONE that many people are coming a cropper when they’re new to property investing. “They trust everything someone says,” she explains. “There are certainly more people out there who are ready to hoodwink novices with a sales spiel.”

Property show

Reynolds joined Landlord Action’s Paul Shamplina, landlord Patricia Ogunfeibo and Hayley Andrews from Your Freedom Empire at the recent Property Investor show in London, to talk about due diligence, offering tips for landlords when dealing with new tenants and for investors looking to do business with individuals and companies.

Reynolds explained how a recent search on social media and LinkedIn had revealed a gap in a prospective developer’s profile which coincided with a period working at a different company which had gone bust. This rang alarm bells and prompted more digging. She advised: “When you’re checking people out, it’s what’s missing as much as what’s there. Some people supress information.” She said it was wise to get three points of information before signing up to anything, so that investors were not just relying on Companies House data or one person’s review.

Land Registry

Putting a tracker on a particular name at Companies House to bring up other companies they have been involved with is a good way to make sure they haven’t gone bankrupt, it was suggested, while looking on the Land Registry and putting a name into Google to check customer reviews were also good ideas.

“Use Google to find information about people, do a CCJ search and check their company accounts to find out whether they’ve filed them, and break these down to build up a picture,” advised Shamplina. “If you’re dealing with a professional, such as a letting agent, ask to see their professional indemnity insurance to understand what it covers.”

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