Due diligence and checking the risks

Get the right team around you

• A solicitor who genuinely understands investment property
• A broker — and a clear sense of the value they add
• A reliable builder, ideally on recommendation
• A planning consultant, if use or layout is changing
• A surveyor, where the valuation or condition is uncertain
• An accountant, especially if buying through a company

Cost the project properly

• Purchase price and stamp duty
• Legal, broker and valuation fees
• Refurbishment costs
• Finance costs and holding costs
• Letting costs and likely void periods
• A contingency — because works often cost more and take longer

Think about timescales

Time is money, especially on bridging. How long will the purchase take? The works? Is planning or licensing needed? Are tenants in place, and can works happen around them — or will the property be empty? How long until you can refinance, and until rent starts? Each of these affects your holding costs and your return.

Understand the end value

Before you buy, form a view of what the property will be worth once complete. Lean on comparable sales, comparable rents, a local agent, your broker, and — where it matters — a surveyor. Ask whether the likely valuation is bricks-and-mortar or investment-based, because that changes everything.

When comparing properties, compare like with like. Use EPC floor area to check you're not comparing a small house with a much larger one.

Mitigate the risks

• Don't overpay — discipline beats enthusiasm
• Understand the true cost of your finance
• Build in contingency
• Check your exit strategy before buying, not after
• Understand lender criteria up front
• Respect planning and licensing risk
• Avoid unrealistic end-value (GDV) assumptions
• Stress-test the rent and the interest cost
• Confirm the refinance route is genuinely realistic