Due diligence is the unglamorous half of buying well, and it's where unrepresented buyers lose the most money without ever noticing. Overpaying by 2% stings; missing a flood overlay, a special levy or a lease that doesn't survive settlement rewrites the whole investment. This is the checklist I run for clients, in the order I run it, so you can hold any purchase (or any adviser) to it.
1. The numbers, before anything else
Due diligence starts before the building, because a structurally perfect property at the wrong number is still a bad buy.
Model the full cash flow under the post-May 2027 tax rules, not the old ones: true weekly holding cost with no annual offset on established stock, the carry-forward loss pool over time, and the sale under the new CGT settings. Check the rent assumption against actual comparable rentals, not the agent's appraisal. Confirm your lending is genuinely approved, not "pre-approved subject to everything". If the deal only works with optimistic rent and the old tax rules, stop here; the checklist just saved you the rest of the fees.
2. The contract
Have a conveyancer or solicitor review before you sign, not after. The items that bite investors most: the deposit amount and release conditions, the settlement period against your finance timeline, special conditions the vendor's side slipped in, inclusions in writing (fixtures, appliances, existing tenancy documents), and in off-the-plan contracts, the sunset clauses and variation rights that carry real risk. If the property is tenanted, the lease transfers with it: read the actual lease, its expiry, its rent, and its bond lodgement, because you're buying that lease as much as the building.
3. The planning certificate and overlays
Every state issues a planning document (Section 10.7 in NSW, and equivalents elsewhere) that discloses zoning, overlays and constraints. Read it for: flood and bushfire overlays, heritage listings, road-widening or acquisition proposals, and anything that limits future use. Then go beyond the certificate: check the council's mapping for surrounding zoning, because the vacant block behind the property has a story, and you want to know it before settlement, not when the excavators arrive.
4. Building and pest
Non-negotiable on houses, and use your own inspector, never one suggested by the selling agent. What matters isn't the existence of defects (every building has them) but their category: structural movement, water ingress, roof condition, active termites and drainage are deal-relevant; cosmetic wear is negotiation material. Get the report before unconditional exchange, and price the fixes into the offer rather than discovering them after.
5. Strata, if it applies
For units and townhouses, the strata report is the building's medical history. Read the minutes for disputes and recurring defects, the capital works fund balance against the building's age, any special levies struck or foreshadowed, and the insurance certificate of currency. A cheap unit in a building with a $40,000-per-lot remediation coming is not a cheap unit.
6. The market checks
Confirm what the pocket, not the postcode, is doing: comparable sales inside the immediate area in the last six months, current vacancy rates and days on market, rental demand depth, and the supply pipeline (approved developments nearby that will compete with your rent). Growth inside a suburb isn't evenly spread; this is where I score 20 metrics per pocket, and it's the layer most buyers skip entirely because the data is hard to get.
7. The exit thought
Before you buy, articulate who buys it from you in ten years and why. A property with one plausible future buyer profile is a risk; one that appeals to owner-occupiers and investors alike has a deeper exit market. If you can't describe the exit, the entry needs more thought.
Running this list without losing the property
The tension in due diligence is speed: good properties don't wait for slow buyers. The practical answer is doing the market and numbers work before you find the property, so the deal-specific checks (contract, building, strata, certificate) are the only ones on the clock. That's the shape of my process: the full method is on the residential lane, and the free strategy call runs the numbers layer, the cash flow model included, before you're committed to anything.
Frequently asked questions
How long does property due diligence take?
The deal-specific checks (contract review, building and pest, strata, planning certificate) typically run 5 to 10 business days, which fits inside most cooling-off or condition periods when they're ordered immediately. The market and cash flow work should happen before the property is found, not during the clock.
What does due diligence cost?
Budget roughly $1,000 to $2,500 per serious candidate: building and pest ($400 to $700), strata report ($250 to $400), conveyancer contract review, and state searches. It's the cheapest insurance in property, and only ever expensive when you skip it.
Can I do due diligence after signing the contract?
Partly, depending on the state: cooling-off periods and conditional clauses (finance, building and pest) create room after signing. But contracts bought at auction are unconditional, which is why auction purchases demand the full checklist beforehand.
What's the most commonly missed check?
The supply pipeline. Buyers check the property and the street but not the 300 approved apartments two suburbs over that will compete with their rent for the next five years. Pocket-level supply analysis is quiet, unglamorous, and decisive.
