There are so many misconceptions out there when it comes to investing in property. I've seen people who have a little bit of knowledge quickly get themselves into trouble because they're just not aware of what they're doing wrong.
It should go without saying, but I'm not sure people are aware of the scrutiny that you need to give a deal. Certainly, if you're presenting a deal to an investor or a lender, they're going to look under the bonnet, and if you haven't done your homework, your deal’s going to be rejected.
But they’re not going to take you aside and tell you what you did wrong. They'll just say that the mortgage (or loan) hasn’t been approved, and you'll be left scratching your head.
Novice investors seem to make one of two mistakes when it comes to analysing a deal. The first is someone who thinks that they're buying in a good area and that’s enough for a lender or bank to lend you money. That’s the first mistake: there's an awful lot of nuance behind what makes a ‘good’ area.
The other mistake I see people making is them looking at what they can afford… and that's as far as they go in terms of analysis. They don't dive into the economics of the deal, just whether they can raise the deposit and make their monthly payments.
Understanding the finer points of a deal boils down to how experienced you are as a property investor. It’s one of the problems that I find when people join my courses: from listening to other people talking, they soon start to realise how much they don’t know!
