Comprehensive Due Diligence: How We Validate Every Euro (2/3)

Due Diligence That Saved Our Client €200K: The 47 Points We Analyzed (Part 2/4) 

In a €650K investment in Madrid, our due diligence uncovered 3 critical risks that could have cost €200K. Here we reveal our complete process.

OUR 5-PHASE DUE DILIGENCE

PHASE 1: LEGAL AND URBAN PLANNING ANALYSIS (12 points)

Developer Documentation:

• Articles of incorporation and current powers of attorney

• Annual accounts for the last 3 years

• Bankruptcy status and liens

• Bank references and guarantees

Urban Planning Status:

• Building permit: valid and unconditional

• Official project certification by professional association

• Final urban classification

• Compliance with municipal regulations

RISK IDENTIFIED 1: Sanction procedure by City Council for noise in a previous project

• Impact: Possible 2–3 month delivery delay

• Solution: Penalty clause in contract

• Savings: €24K in temporary rental costs

PHASE 2: TECHNICAL AND CONSTRUCTION ANALYSIS (15 points)

Construction Quality:

• Technical report and final specifications

• Energy and acoustic certifications

• Ten-year warranties and insurance

• Construction company and subcontractors

Regulatory Compliance:

• Spanish Building Technical Code (CTE)

• Universal accessibility

• Installations (REBT, RITE)

• Occupational health and safety

RISK IDENTIFIED 2: Differences between technical and commercial specifications

• Issue: Laminate flooring vs. natural parquet

• Financial Impact: €12K value difference

• Solution: Price or specification renegotiation

• Result: Additional €8K discount

PHASE 3: FINANCIAL AND COMMERCIAL ANALYSIS (10 points)

Financial Viability:

• Financing plan and payment schedule

• Pre-sales and sales pace

• Comparable prices in the area

• Developer’s cost structure

Demand Analysis:

• Demographic study of the area

• Direct competition within 1km radius

• Average sales time in the area

• Typical buyer profile

KEY FINDING:

• Pre-sales: 68% sold (vs 40% reported)

• Indicator: Higher actual demand

• Opportunity: Accelerated appreciation

PHASE 4: INTERNATIONAL TAX AND LEGAL ANALYSIS (5 points)

For Mexican Client:

• Applicability of Mexico–Spain tax treaty

• Optimal tax structure (individual vs LLC)

• Reporting obligations to Mexican tax authority (SHCP)

• Golden Visa and residency requirements

• International estate planning

RISK IDENTIFIED 3: Initial structure created double taxation

• Issue: Purchase under individual name

• Impact: €15K/year in additional taxes

• Solution: Use of Spanish LLC structure

• Savings: €37.5K over 2.5 years

PHASE 5: ENVIRONMENT AND FUTURE OUTLOOK ANALYSIS (5 points)

Urban Development:

• Current General Urban Plan

• Planned infrastructure projects

• Commercial and service developments

• Future transport connectivity

• Area demographic trends

EXTRAORDINARY FINDING:

• New metro line planned (not yet public)

• Station 200m from the building

• Expected opening: 2026

• Impact: +15% additional appreciation

ECONOMIC SUMMARY OF THE DUE DILIGENCE

• Analysis investment: €12,500

• Risks detected and mitigated:

  • Construction delay: €24K saved

  • Specifications: €8K negotiated discount

  • Tax structure: €37.5K saved

• Total protected: €69.5K

• Due diligence ROI: 556%

OUR ANALYSIS TEAM

• Legal: 2 real estate lawyers

• Technical: Architect + Quantity Surveyor

• Financial: Real estate risk analyst

• Tax: International tax advisor

• Market: Valuation specialist

Why Do 90% of Investors Skip This Process?

• Reason 1: Apparent cost (€12.5K)Reality: Real savings (€69.5K)

• Reason 2: Time required (6 weeks)Reality: Prevents years of problems

• Reason 3: Technical complexityReality: Our expertise makes the difference

Next week, we reveal the execution of the purchase and the optimized tax structure.

Want our team to analyze your next investment with the same rigor? Request your strategic due diligence.

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