If you read my last post, you may be wondering, “How did my clients buy a property and then 13 months later have it appraised for 50% more than the purchase price?” What’s the secret? If you read any kind of real estate investment books (and believe me, I’ve read a bunch!), you will see time and time again the advice of the gurus is: “buy below market price.” Sage advice indeed! My client did indeed buy the property for about 30% below market price at the time. How did they manage to do that?
They got a little lucky. 🙂 They had been looking to buy some raw land, and then build a home on it. They were under the idea that they could save some money doing this. In actuality, this isn’t really a good way for your typical buyer to save money, and after talking about the idea with them at some length, they came to agree that it wasn’t something that was right for them at the moment. Instead, they began looking at Fixer Uppers that were located on good, high quality land.
You may have heard this before, too: “buy the worst house on the block.” This is what my clients ended up doing. At the time, every property on the street was worth around $1 million. And, indeed, this property had been initially put on the market for $999,900 or so…and it languished for months and months, because it was severely over-priced. The owner lived out-of-state, and just “knew” that the property was worth $1 million. Unfortunately, no buyers agreed – the listing agent had received several “low ball” offers over the months…but it finally took yet another low-ball offer and en e-mail from me explaining how “the value is in the land” – accompanied with some comparable land sales in the area – to get the seller to accept a price dramatically lower than asking price.
And that’s the secret! A lot of patience, a little luck, throw in a good measure of determination, and voila! You too can purchase a property for substantially less than it’s worth. My clients did do work on the property, of course – it looks a lot better now than the day they bought it. Even so, the appreciation they have enjoyed in their property’s value is stellar. And you can do it, too. You may have to pay more for a property than you’d like (they certainly did, even though it was a big discount) – but begin with the end in mind – think of the bottom line when it comes time to sell, and you can do very well for yourself, as these clients have done.
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