We’ve been talking a lot about numbers and formulas in these real estate investing articles. However, I also need to let you in on a secret about buying on price and cap rate so you can avoid REI Mistakes.
You will never find geat deals if you buy on lowest price and highest cap rate.
I know this is contrary to everything you’ve been taught. “Buy low, sell high” is the oldest real estate adage in the book. Nevertheless, it is not always the case.
Instead of buying on price and cap rate, let me show you how to find the best deals.
Buy high, sell higher
Notably, some of the best deals I’ve ever done have been the ones I’ve paid the most for. The best assets always come at a premium price and lower cap rates.
Lower price is not an indication of a good deal. You have to look at why the cost is the way it is.
While a smaller price tag may not indicate a profitable deal, it can indicate that the location is bad. Are businesses leaving the area?
This is another reason why you really need to do your research on the markets you’re looking to buy in. Also, you need to compare tons of deals against one another in the same area.
It’s not the price you pay, it’s the price the next guy pays
This next step is often overlooked, but so important.
Know how you will exit the deal before you buy it.
With solid data on the market and your deal, you will know how high a price you can pay to score a premium asset and make a profit.
To sum up, there is just one thing you have to know about buying on price and cap rate. It’s a mistake.
Investing is not about pinching pennies. It’s about Creating Wealth in Real Estate.
You can only do that with great deals.
Disclosure: This content is intended to be used for educational and informational purposes only. Before investing, you should always do your own analysis based on your own financial and personal circumstances before making any investment. Grant Cardone is an industry expert who has been investing for over 30 years and his opinion is based solely on his own personal experience and circumstances. Individual results may vary. You should perform your own due diligence and seek the advice from a professional to verify any information on our website or materials that you are relying upon if you choose to make an investment. Investment involves great risk and there is no guarantee of performance or results.
We are not attorneys, investment advisers, accountants, tax professionals or financial advisers and any of the content presented should not be taken as professional advice. We recommend seeking the advice of financial professional before you invest, and we accept no liability whatsoever for any loss or damage you may incur.
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