The Need For Due Diligence

When large corporations set out to make major acquisitions, they thoroughly investigate just about every aspect of the company, product, or property that they are interested in acquiring. Such investigations, known as due diligence, include verification of any representations made about the asset they are considering acquiring, as well as careful analysis of past trends and anticipated future growth and development. Individuals who are interested in acquiring real estate would do well to mimic the practices of corporations interested in making acquisitions.

Some states have enacted laws that require sellers of residential real estate who have been living in the properties they are selling to prepare written disclosure statements concerning the condition of their properties. These disclosures generally consist of forms that require owners to check off boxes to indicate whether or not they are aware of any problems concerning specific aspects of their homes, such as roofs, electrical systems, appliances, or driveways, as well as questions about whether or not the house has had problems with old or has any of a number of other shortcomings that may affect its market value or its appeal to a potential buyer. However, those who sell their homes as is, or who are selling a house they had not previously occupied, are not generally required to provide such disclosures. Sellers who are required to provide the disclosure statements must merely give their opinions as to the soundness of their properties, thereby making the statements highly subjective. This often leaves disappointed buyers with little recourse when they later discover the defects that challenge the previous owner's evaluation of the property.

Even when a seller's disclosure statements are so specific that it becomes clear when defects are later discovered that the seller has defrauded the buyer, the cost and aggravation of legal action may outweigh the cost of paying to correct the problems that were concealed. Therefore, even when sellers are required to provide disclosure statements regarding the condition of their properties - and especially when such disclosures are not required - it is imperative that buyers conduct thorough investigations of their own can properties that they are considering.

Controlling Spending

Those who have managed to become financially independent through a process of slow accumulation of capital generally work as hard, if not harder, at spending their money as theyy do at making it. The person who makes an extra $100 may have to pay certain costs associated with earning that money, such as the expense of commuting to and from work and extra day, and will almost certainly have to pay taxes out of the extra earnings. It would not be at all unusual for a worker who earned an additional $100 to net only about $65 after paying taxes and costs related to earning the extra money. On the other hand, if you cut your spending by $100, you will have the full $100 to show for it.

Developing a Savings Plan

There are always going to be those fortunate few who inherit large sums of money, win a lottery, get a nice settlement form a lawsuit, or otherwise come into a sizeable sum of money all at once. However, most simply have to accumulate investment capital through old-fashioned thrift. The person who waits for the big score in order to have money to invest will probably never have any investment capital.

Thrift is a combination of smarts and discipline - but mostly discipline - that leads to a habit of spending less money then you make. Do not get discouraged because you are only able to save small amounts of money on a regular basis instead of large chunks at a time. For those who have been in the habit of spending more than they make and going deeper and deeper into debt, changing their spending habits to allow for even a modest amount of savings is a major accomplishment. Also, once people who have not been savers in the past start to accumulate some savings, they usually feel so good about their accomplishments that they are encouraged to do more. Even a fairly small, but regular, savings plan that is supplemented by windfalls, such as tax refunds or bonuses form employers, can result in a significant accumulation of money over a period of time.