As a buyer, it’s important to recognize the difference between getting a great price and BUYING QUALITY PROPERTIES AT A DISCOUNT. Price is only part of the valuation of a property. You do not have to look further than some of the Bank Owned Foreclosures and Short-Sales in your market to see the difference. There is a trap many buyers fall into at some point, and that is leaning toward the best price vs. the best value. Imagine you are buying an investment property that you plan on holding for a minimum of 5 years. There are two properties that are essentially identical for you to choose from. Same size, same number of bedrooms, etc. One is priced $15,000 below the other unit. Which one do you purchase? If you say the lower priced property you are not alone. Many inexperienced buyers and investors would say the same and possibly make a mistake. They are choosing price over the other factors that affect value. Here is why you want to Buy Quality At A Discount.
- They are priced correctly: Because they are Quality properties they typically don’t need to be priced below similar sales. They can compete as is. Quality properties will be on the market for a shorter time and sell closer to their asking price.
- They are Typically In Good Condition: Less out of pocket cost up front means more capital and higher profit early in the investment which adds to better overall performance. This allows for a quicker turn time because you don’t have to recoup the extra cash.
- Well maintained homes equal less long term expense. Quality homes have been cared for on the outside and preventative maintenance items have been taken care of on the inside. This will add to your bottom line profit over time.
- Quality properties are the first to sell. In a market with a lot of inventory, they are the first to begin to appreciate.
- Quality properties have a higher upside. In a market that is appreciating the value of EVERYTHING is rising. Values rise because of a lack of inventory. When there is little inventory, and the B and C grade properties are appreciating, people will pay a REAL PREMIUM for the Quality properties so they don’t have to spend more money on improvements.