FAQs

What is due diligence?

There have been thousands of words written about due diligence but it can be summed up in one sentence:

“Get off your back-side and check that what your are being told is true - by someone who has no vested interest in the answer”.

For a property investor the key parameters that need checking are:

1.What is this place worth?
2.What rent can I expect to get?

We all know that markets change but it is not acceptable, whether you are buying a completed property or buying off-plan, to accept the figures given to you by the sales guy in the wide-boy suit. Why would you?

It is your job to check the figures and that can be done very easily by phoning a few estate agents and letting agents in the area and by spending a short period of time on the internet.

Here's a tip - if you want to know EXACTLY what the time of day is, and you want a certain degree off accuracy, it is no point having just one watch. In fact it is no point having two watches either because if they tell a different time how will you know which one is right?

So you need a minimum of three watches to know the exact time of day.

The same is true with property. Get a couple of answers to add to what you have been told by the salesman and chances are you will be a lot closer to the truth.

Also, remember to challenge the figures you are given by asking the source of the data. How many people do this? No -one does it? So where do the figures come from? Were they made up?

If they weren't then you won't mind telling me where you got them from will you?

The reason foolish investors want to believe the very first answer they are given by the sales guy is that it fits with what they WANT to hear. If you start questioning it or getting other opinions you may not get the answer you are looking for. Investors want reassurance and if a salesman tells them they will get 28 weeks at £700 a week why would you want to challenge something as juicy as that?

Because it's probably all cobblers that's why.

Due diligence is all about checking you are not being lied to – so get off your butts and do it. It will take less than an hour at most.

Otherwise I can only assume that you have so much money it really doesn't matter what figures you are given.

How do you know that gold and silver will continue to rise in value?

I don't. They could go even down in value – in fact they do every day, it's just that they go up more each week than they go down at the moment. OK if you were clever you have been buying gold for the last 5 years but if you haven't you need to look at the drivers (as always). Gold is in short supply and new gold coming onto the market only increases by about 2.5% a year, Now compare that with the supply of new money which is well over 4, 5 or even 6 times that amount. Which do you think will lose its value the most, paper money or gold?

Gold still remains cheap compared with the 1980 high of $850. Just to keep up with inflation it should be worth $2,500 today and even then it would have only kept pace with inflation.

I believe that the bull market in gold hasn't even started yet. Yes there will be dips along the way but I will see those a s buying opportunities as gold heads even higher, and silver follows suit.

The old adage was that you should always have 10% of your wealth in gold. My view is that you should split your wealth four ways - 25% in commodities (inc gold), 25% in property, 25% in cash and 25% to play with as opportunities arise.

Do you ever invest in gold shares?

Yes I do. I am not keen on stocks and shares in general but I do think that gold shares represent excellent value in 2008. I currently invest in two of the larger mining companies shares – Gold Fields and Goldcorp Inc.

I will be putting more money in Goldfields in 2008 because I believe it is massively undervalued right now.

Which countries are you currently looking at with a view to investment?

I am currently investing in Cyprus and the UK and am carrying out due diligence in Uruguay, Brazil, Argentina, India and China.