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DIY DD on large investments reminds me of a short term client that learned the hard way. They had been looking to buy a commercial investment property located in a high growth residential area for a while (they wanted to develop it into residential commercial mix). A property came up that appeared to meet their requirements and they met with us and discussed a few items (tax GST etc) before attending auction. I recommended that they seek a professional building property inspection for a qualified expert BEFORE making any offer. I told them it would probably cost around $1000 for a commercial site inspection but would be money well spent to avoid potential more costly issues. They politely commented that didn’t need one because after doing some research they could do their own assessment (the don’t know what you don’t know bit).
Fast forward a month and I called them. They had purchased the property at the auction but were in trouble. Turns out the land was contaminated because it had once been used as service station with tanks covered many many years prior. The bank had various requirements for the commercial loan and they would not lend on that contaminated land – same answer from several banks (in our meeting they had advised finance was sorted but clearly also missed the detail on that front). They were weighing up options including immediately selling or sinking big money into decontamination experts just to determine the scale of the problem (think the quote on the initial report was $10k to $20k).
I wonder how they feel about that DIY now.
