In Property - You Make Money When You Buy, Not When You Sell.

In Property - You Make Money When You Buy, Not When You Sell.

Ever had somebody tell you that he just made so much money selling some real estate? Fact is, that person did not make the money selling the real estate holding, chances are buying in the first place generated the profits.

A common saying in real estate investing is, “You make your money when you buy, not when you sell.” This means that your purchase price is the main factor that determines your profit later on. You can’t only rely on an appreciating market, wishful thinking to create your profit margin.

Despite it being one of the most common sayings in real estate, investors still miss the significance of this first and most important step. Making your money when you buy simply means buying “right.”

Lets look closer at a sale. One has to assume that the market as a whole is well informed and has professional assistance in form of real estate professionals. The best deals in the market tend to sell first and overpriced properties will not sell until the market has moved up. A seller therefore can expect to obtain market value for the property. It is very unlikely that by some chance the seller will stumble upon a buyer willing to overpay for a property.

Now lets have a closer look at the buying process. When buying you are negotiating with the seller. The seller might or might not be completely informed about the market value of the property. The seller might be facing special circumstances that might make the seller more motivated to sell at a below market value. You might be in a position to get this kind of offer and therefore a motivated seller might be willing to come down on the price. When buying property you are competing with the market for a property.

It is during the buying process that you can find the pearls. Buy property where you see potential. Find the seller that is most motivated. Do not get hung up on a particular property just because you have fallen in love with it. Once you have found the person and the property that meet all your criteria,


negotiate hard and make the deal happen.

It is at the time of buying when you set yourself up for future profits. But the profit potential that you control is 100% related to your buying decision. Not only in terms of the price you paid but also in regards to all other variable factors like LOCATION, DESIRABILITY of STRUCTURE, CONDITION of the DWELLING, RENTAL POTENTIAL and so on.

So when buying your next property keep in mind that it is the key. Selling just represents the completion of a wise buying decision.

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