A practical pre-purchase checklist for checking the property, price, rental assumptions, contract and risks before you commit.
Why due diligence matters
An investment property can look straightforward in a listing and still carry costs or risks that change the decision. Due diligence is the work of checking the property, price, rental assumptions and purchase documents before you are legally committed. It is not a guarantee that nothing will go wrong; it is a way to make an informed decision with fewer unknowns.
The checks differ by state, property type and contract. Your solicitor or conveyancer, building inspector, broker, insurer and other qualified professionals should advise on the parts of the purchase within their expertise.
Check the market and the price
Gather recent settled sales for comparable properties, not just current asking prices. Compare location, land or floor area, condition, age, layout and any inclusions. Understand how the sales method works and what evidence supports the vendor’s price expectations. Set a maximum price based on your own assessment before negotiation or auction.
For the rent, compare recent leases and current listings for similar homes. Ask how the estimate was prepared and whether it reflects actual market evidence. Stress-test the numbers for a lower rent, a vacant period, higher interest costs and repairs. Gross yield alone leaves out many ownership costs.
Inspect the property and the location
Arrange an independent building and pest inspection where appropriate, and ask the inspector to explain significant findings, access limitations and recommended follow-up. Check visible condition, drainage, roof, services, ventilation and signs of past repairs, while recognising that an inspection has a defined scope.
Research the surrounding street and local area at different times if you can. Check relevant planning controls, proposed development, flood or bushfire mapping, transport impacts and insurance availability. For apartments and other strata-titled property, obtain and review strata records, financial statements, maintenance plans, meeting minutes, insurance and any proposed special levies with qualified help.
Review the contract and costs
Ask your solicitor or conveyancer to review the contract and disclosure documents before signing. Confirm title details, easements, restrictions, inclusions, settlement dates, deposit terms and any conditions that matter to you. Disclosure documents and required searches vary across Australian states and territories, so do not assume one state’s process applies everywhere.
Build a complete purchase budget. Depending on the transaction and location, costs may include transfer duty, conveyancing, searches, inspections, loan costs, insurance, rates adjustments and strata charges. Moneysmart lists common costs of buying, holding and selling an investment property. Use the relevant state revenue office for duty estimates and confirm your individual position with a qualified professional.
A decision record you can revisit
Before you proceed, keep a short record of the evidence: comparable sales, rent assumptions, inspection findings, contract advice, running-cost estimates and unresolved questions. Separate facts from estimates and assumptions. If an important point cannot be verified in time, decide whether you need more information, a contract condition or a different property.
A good process includes permission to walk away. If the price, condition, contract or likely holding costs no longer fit the brief, passing on the property can be the right outcome. See how Nextprop assesses a property before recommending an offer.