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The current economic climate more than ever makes overseas property one of the safest homes to put your money. Banks come and go these days – property remains standing and provides for our most basic of needs comfortable shelter.

Welcome to the first part of my property buying due diligence guide, and look forward to us speaking soon.

Part 1 - Legal

Introduction

Any new property decision has its risks. These risks are often not immediately apparent in the excitement of searching for the perfect overseas home.

My inspiration for this series rests on lessons I learnt back in back in the 1988 with the stock market crash – I was working in the City of London and then a few years later on in banking where I had to credit assess businesses and make lending decisions.

Credit mistakes have to be paid for – make too many and the price is high. My over riding impression is that risk was always underestimated by many and that the check and balances in a system have to be robust.

The current credit crunch feels to be a repetition of the same old mistakes. In a nutshell it’s the lack of real independent thought when it comes to understanding a deal and its risks.

Why should I bother reading these reports?

My due diligence process is about finding out about what you don’t yet know. Assessing the results and coming to an informed decision.

I will not pretend that this is a quick or necessarily enjoyable task. What I cannot over estimate, however, is how important it is that all overseas property investors read this report. Quite simply it could be the best investment in 5 minutes you have ever made.

Builders, developers and agents have work hard to try and highlight the merits of each property investment opportunity. Much is spoken on maximizing returns and potential pitfalls.

I will now give you the tools to dramatically improve your chances of successful and therefore enjoyable overseas property investment.

What is due diligence?

Wikipedia says: “Due Diligence is a term used for a number of concepts involving either the performance of an investigation of a business or person, or the performance of an act with a certain standard of care. It can be a legal obligation, but the term will more commonly apply to voluntary investigations. A common example of due diligence in various industries is the process through which a potential acquirer evaluates a target company or its assets for acquisition.^[1]”

Wikipedia then goes on to discuss the difference between duty of care and due diligence and summarises: “When read carefully, care is the passive mode; diligence is the active mode”

The key word here is being in active mode. Property buyers should go into active mode not just at the point of purchasing or committing to a property but also during the period before.

What main risks are we looking for in due diligence?

I will go into this some more but let me point out the big ones:

· your property will not get built

· your property will not actually be owned by you

· you lose all your money

Overseas Property is often promoted with nice glossy adverts and brochures - and sometimes with extravagant claims for rental and growth. Remember they almost always carry a disclaimer in the small print saying that the information within should not be relied upon for your investment decision.

The common mantra is to use an independent lawyer. A good start, but you need much more than this as I don’t believe this is anywhere near what I would call due diligence.

One final point, if you have not realized that you can almost always use a UK lawyer, let me tell you why. Many real estate agents don’t tell you because either they haven’t got a clue, are inexperienced in buying property or simply scared that the sale will be delayed or be prevented completely through legal negotiation.

In the next section I outline my 10 step process when undertaking your legal due diligence for overseas property.

For more please register for full free report this part 1 and part 2