It is safe to say that as investors, we are obsessed with deals. We stay up all night cruising the Internet for good deals while avoiding the bad
ones like a plague. At least that is what we are supposed to do. So why is it that some of us still get ourselves into bad deals?
Deal analysis is not enough to save you from a bad deal if you don’t know what you are doing. Here are five of the biggest analysis mistakes we see
investors make:
Mistake #1: Not analysing at all
Some investors fall into the fundamental mistake of buying on emotion rather than numbers by failing to analyse a deal before signing on the dotted lines.
As an investor, you are not buying houses, you are buying deals. Not having a full understanding of the financial projection and potential
of your property is as detrimental to your experience as renting it to a complete stranger who you know nothing of. Newbie investors often write
off property analysis as something only big-time investors need to do. That is not the case at all. Think about it this way, you wouldn’t
apply for a job if you don’t know how much it pays, what the redundancy package looks like, how much sick leave you will get, what career progression
it offers and annual bonus calculation so why would you buy a property without knowing what it means to you financially?
Related tool: Gross vs Net Return
Mistake #2: Not knowing what a good deal entails
Property analysis is not a cookie-cutter process. What is a good deal for you may be a terrible deal for your mother. Before you even start
to analyse a...
