As a buyer, it is important to recognize the difference between getting a great price and buying a quality property at a discount. Price is only part of the evaluation of a property. You do not have to look further than some of the bank owned foreclosures or short sales in West Michigan to see the difference. There is a trap that many buyers fall into at some point, and that is leaning toward the best price vs the best value.
Imagine that you are buying an investment property, and that you plan to hold it for a minimum of 5 years. There are two hypothetical properties for you to choose from, and they are the same size, number of bedrooms, etc. One property is priced $10,000 below the other. Which one do you purchase? If you said the lower priced one, you would not be alone. Many inexperienced buyers and investors would say the same, but might be making a mistake. They are prioritizing price over the other factors that affect value.
Here are some things to consider about a property in an effort to Buy Quality Properties at a Discount:
- Correctly Priced: Quality properties will be on the market for a shorter time and sell closer to their asking price. Please feel free to consult with me and get my opinion on the price of a property.
- Good Condition: Less out of pocket costs up front means more capital and higher profits earlier in your investment. This adds to better overall performance and quicker turn time as you don't have to recoup extra cash invested in unexpected repairs and improvements.
- Rent Sooner/Faster with more Stability: Better properties will rent more quickly and have less vacancy over the long term.
- First to Sell: Quality properties will sell more quickly when you reach the point of exiting the investment. They will also be the first part of the market to begin the cycle of appreciation.
- Higher Upside: Quality properties have a higher upside. In an appreciating market, the value of everything is rising. "A Rising Tide Lifts All Boats". In markets like that of 2015-2016, values rise simply because of lack of inventory. When the B & C grade properties are appreciating, buyers will pay a real premium for the highest quality, or A properties.
You can see that VALUE is more than just price. A savvy buyer is looking for a great value and you do this buying considering these tested methods for Buying Quality Properties at a Discount.
Any time you are considering a new real estate investment and want professional advice, please contact me or a team member.