Due diligence checklist every investor should use
Most investment losses are not caused by bad luck. They are caused by a question nobody asked. A disciplined due diligence process is simply a way of making sure the questions get asked before the capital moves, not after.
This checklist is written for property-backed investments — secured loans, mezzanine positions and preferred equity — and it works through the same order a credit assessor would.
1. The security
Start with what actually stands behind your money.
- What is the security, and where is it? A registered mortgage over real property is a different proposition to an unsecured or personally guaranteed position.
- What ranking do you hold? First-ranking, second-ranking, or an equity interest behind all of the debt — and if second-ranking, what does the deed of priority say?
- What other encumbrances sit on the title? Caveats, second mortgages, statutory charges and unregistered interests all matter.
2. The valuation
A valuation is an opinion on a date, prepared on an instruction, for a party.
- Who instructed it, who is it addressed to, and can you rely on it?
- On what basis was it prepared — as-is, as-if-complete, or a hypothetical development assessment? These are very different numbers.
- How old is it, and what has moved in that market since?
- What comparable evidence supports it, and is that evidence genuinely comparable? This matters most in regional markets where the comparable set is thin.
3. The leverage and the buffer
- What is the total debt against the asset, including anything ranking ahead of you?
- How far would the value have to fall before your position is impaired — not the senior lender's?
- Does interest capitalise? If so, the debt grows through the term and the buffer narrows as you hold.
4. The borrower or sponsor
- What have they actually delivered before, and was it comparable in scale and type?
- What is their conduct history on other facilities?
- What is their own capital contribution, and is it genuinely at risk alongside yours?
- Who is the borrowing entity, what sits behind it, and are the guarantees worth anything?
5. The project
Where the investment funds a development rather than a completed asset:
- Is the feasibility internally consistent, and are its assumptions defensible or merely optimistic?
- Are the planning approvals in place, and are any conditions or referral-authority issues outstanding?
- Is there a fixed-price building contract, and is the builder financially capable of honouring it?
- What contingency is carried, and is it realistic for the build type and the market?
6. The exit
This is the question that decides whether you are repaid.
- How is the investment repaid — sale, refinance, or income?
- Is that exit evidenced, or asserted? Contracted presales are evidence; an expectation of demand is not.
- What happens if the exit is late? Most property risk is timing risk before it is value risk.
- Is there a credible second exit if the first one fails?
7. The manager and the structure
- Who makes the credit decisions, and what is their background?
- How are conflicts identified and managed, and is that documented?
- What are the fees, and how do they align the manager with your outcome rather than with deployment volume?
- What reporting will you actually receive, how often, and what does it contain?
- What is the liquidity position — when can you get out, and under what conditions?
8. Your own position
- Do you meet the eligibility requirements for the offer, and has that been properly established?
- How does this fit your existing exposure — to property, to a single manager, to a single market?
- Have you read the offer document itself, rather than the summary of it?
The discipline that matters most
The value of a checklist is not the list. It is the willingness to walk away when an item cannot be answered. An investment that cannot survive the questions on this page was never going to survive the market. See also how secured private credit protects capital and understanding your security position.
Speak with Siare about how our positions are assessed, structured and reported.
This is general information about wholesale investment structures only. It is not financial, legal or tax advice, is not an offer, and does not take account of your objectives or circumstances. Any investment is made solely on the terms of the relevant offer document, and you should obtain your own advice.