Post #7 - Never Ending Due Diligence

Investors,

I'm nervous for tomorrow.  The property I've been researching and analyzing goes up for public auction and, if it's at or below my number, I'm going to buy it.  I've been working on the background info, analysis, and financing for this property for about 5 weeks.  Which brings me to the nagging question I'm having:  When do you know your Due Diligence is complete?

As many other investors, we I started out, the wealth of knowledge was almost overwhelming.  The mountains of books to read (and re-read), the hours of podcasts to listen to, the hoards of experts to talk to, and not to mention actually looking at properties.  It's a lot!  When you finally find a great property, there is a whole other world of things to dig for and find out.  Everything from the history of the property's occupants to the city's ordinances to the workable life of a water heater.  

A few weeks ago, I thought I had everything I needed for my analysis.  But what I didn't know that I didn't know was haunting me.  What if I forgot to factor in a certain type of something into my homework on this property?  A day before, a friend called me up and said something about zoning regulations.  That is something I hadn't even thought about but (I found out later) could have been disastrous.  Here's my point:  I didn't EVEN KNOW that I needed to know about zoning.

Now fast forward a little.  I've called everyone I know in the area and all the current rental property owners and asked for any and all advice.  I've learned a lot and feel a little more comfortable with my analysis numbers.  I've read Ken McElroy's book (The ABCs of Real Estate Investing) and picked up a few rules of thumb from there.  Now, my analysis has a number in every category that it needs to.  I feel 1000 times better than before.  And even though some areas are based on percentages or estimations (not exact numbers), I know that they are educated approximations.  I have gotten quotes, expert opinions, and suggestions, while also saving a contingency reserve for things I haven't thought of.  Every figure of my analysis is explainable (which is great for presenting the deal to private investors, partners, and banks).  This makes me feel more confident with my final offer number and that is worth a lot.

I know that Due Diligence doesn't ever end for real investors because things are always moving and changing.  Going forward though, I know the importance of record keeping.  I'll eventually have the data to pull percentages and rules of thumb from in the hunt for future deals.  

Which brings me back to square one, getting my first property.

Trent