What Price Do You Pay When Purchasing Property?
This makes for an interesting argument. What do you think?
Case 1: Make a sensible offer:
I often read from investors that when purchasing you should make a sensible offer and not “low-ball” the seller. The theory behind this is that you should be more interested in the cashflow of the property, not so much the purchase price of the property.
Case 2: Buy as low as you can go:
The other side of the story is to search for properties where you will be able to ‘get a bargain’ and buy a property at a ridiculously low price. Properties where the owners have fallen behind in payments, an estate sale or a property in bad repair are often targets.
Which would you do?
There are many influencing factors here and a lot of it comes down to how you are going to manage your property investment portfolio.
Considerations to take into account are:
· Cashflow
· Loans
· Equity value
· Rental income
· Renovation and renovation costs and finance of
· No rent due to renovations taking place
· Missed opportunities while waiting for a bargain
When you weigh up the different considerations you can see that each case has its own merit. Depending on the size of your portfolio you may use both methods of purchase. Both have positive aspects to the system and both have negative aspects, so care needs to be taken in evaluating which will work best for your situation.
Filed Under: Investment Strategies • Property Investment Tips
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