Sometimes, even investors who already have a few properties under their belt get tricked, too. They sometimes forget to do the most basic checks when buying properties when presented with a good enough deal. If even these investors can get tricked, what more the inexperienced, first time, condo-buyer?
And that’s where the checklists come in. In his phenomenal book, the Checklist Manifesto: How to Get Things Right, author Atul Gawande demonstrates the incredible power of the simple checklist. In that book, with a single piece of paper, doctors were able to save about twice more lives, just by following the steps they usually forget in high-pressure situations.
We have a less noble goal. But for a real estate buyer or investor, preventing loss is also an important objective.
So here we give you a relative short list of things to check on when you are making your condo investment.
Just a word of warning: this is not an exhaustive list of things you need to check. Instead, my aim here is to get you thinking about potential problems in certain key areas. Not every deal is exactly the same. I suggest you tweak this list to suit your particular purchase decision.
The Simple Condo Investment Checklist…For Serious Investors and Buyers (version 0.1)
- At least more than 10 completed projects in their portfolio
- With experience in developing a similarly sized and complex property development
- Currently no significantly delayed project
- Information about the project is openly provided
- No legal trouble experienced by the company or the project. Cases filed against the company are not material in nature
- Financial statements of the company may be obtained to establish performance over the past 3 to 5 years
The Condo Building and Unit
- The whole building is reasonably clean and well maintained
- Nearby properties have no reported/visible structural problems
- No problems with the access (doors), plumbing, electricity, lighting and/or ventilation
- Internal layout of the property is suited for the purpose you want it to have
The Condominium Certificate of Title (when obtained)
- Details in the contract to sell or deed of absolute sale are the same with the CCT
- No liens or other annotations beyond those disclosed by the developer (such as the Master Deed of Restrictions)
- Title is printed in the correct paper
- Details of the CCT match the certified true copy obtained from the Registry of Deeds
Loan and Loan Documents
- Terms and condition in the Contract to Sell regarding the financing (installment payments, interest rates, events of default, and consequences of default) are clear and acceptable
- Limitations on the assignment of the property/contract to sell during its term is acceptable
- The partner banks where you will be referred to have acceptable terms and conditions regarding the loan takeout
- The regular cash flow to support payments of the loan can be supported by your income or your savings
About the Deal and the Market
- Similar properties in the neighborhood are selling higher or about the same as your property
- Area where the property is or will be built is a developed or fast developing neighborhood, with businesses and services located or locating in the area
This checklist remains to be a work in progress, as we add more crucial questions that would help you systemically figure out if you’re buying into a good deal.
If you have suggestions on how to improve this checklist, let me know in the comments, or contact me via the contact form HERE.
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