5 Tips That You Can Use As Part Of Your Contractor Due Diligence

Property Investment Due Diligence

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Important tips in contractor Due Diligence

It is vitally important that you undertake adequate due diligence on any builder or contractor that you engage. This is key to ensuring a successful outcome and limiting any unwanted surprises through the process of building your investment property.

What I’m going to do is run through part of the process that we use. Then I’ll give you some basic checks and questions that you can use yourself. This will enable you to undertake your own due diligence checks.

Because we are on the ground and so active in the new building space we are well aware of most of the builders by the quality of work and their reputation. In fact, most of the builders we work with we’ve known of and worked with for years in some instances a member of our team have known builders we work with for more than 20 years. 

Now just a quick run-through of some of the due diligence that we undertake.


We do extensive checks on all builders that we work with which includes:

–          Builder’s licence checks.
–          On staff we have a qualified carpenter and builder go through previous work,
–          We check with customers and clients that they have built with
–          We go through builds at all of the different stages of construction to check on the quality and also the building methods. Including slab, frame, enclosed/lock up, pre-paint, and practical completion.
–          Because of our industry connections and contacts we’re able to ask around through our network and have a good idea about a builder’s work.

In most instances you’re not going to have the connections or expertise to undertake the extensive checks we do, so I thought I’d put together 5 actions that you can take as part of your due diligence.

5 Tips That You Can Use Yourself to Do Due Diligence on your investment property builder

1.       Builders Licence Check, as part of your builder’s licence check you want to know the following:

a.       How long have they been operating?
b.       How many properties they have built and how many properties they have built in the last year
c.       What is their allowable turnover?
d.       Do they have any outstanding rectification work?

Builder’s Licence Checks can be done with your relevant State Building Authority. It is generally a pretty easy process. Check your Builder’s license in Queensland. 

2.     Go through previous work that they have completed.

This doesn’t mean display homes it means properties that are about to be handed over to other clients. Builds with similar inclusions and specs as a property you would be purchasing.

3.       Check the quality and level of their inclusions and specifications.

You should spend time going through each of the inclusions. Make sure that everything you need is included.

4.       Insist on a Fixed Priced turnkey Contract.

If they’re not willing to do that then walk away.

5.       Ask them how long they estimate the build will take

And then ask them what the build time in the contract is, and how much the liquidated damages clause is. The liquidated damages clause states how much they will pay you for each day they are over the contract time.

If you wish to find out more details, feel free to talk to us today. Our advisors would be happy to help! 

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