Which is a Better Investment: Cheap Property or The Best Cash Flow and Total Return?
As a question, which is a better investment - Cheap Property or The Best Cash Flow and Total Return? Sounds like a no brainier right? Not so fast. Many people are selling (or buying) property based on emotional indicators of a cheap price point Everybody wants to buy a property and say “ I bought a property for say, 25K or 35K, only to later discover they bought a 25k or 35k liability. The properties that sell for the least are typically worth the least and are selling fast and fiercest because the price point tugs at your emotions, fooling you into believing you got a great deal. Always remember the exit strategy when you make the purchase. Who will buy this property from you? Is it in a family neighborhood that will bring a hefty return when you sell or is it in a transitional area that is high density and away from the path of progress that will only be purchased by an investor? To get the best return you need the largest buying audience.
Cheap Properties DO NOT Guarantee Cash Flow! Cheap does not necessarily mean great cash flow either. There are cheap properties in areas that have incredibly high taxes and insurance which will reduce the net cash flow.
Stick to your plan - if you do not have a real estate investing plan, stop everything and make one. Within your plan you need to identify why you are buying the property.
If it is for cash flow, run the numbers and make sure at the end of the day the cash flow is matching your expectations.
If you are buying an investment property for growth, make sure you are purchasing the correct property in the correct location so you can sell to the end user for top dollar.
If it is a combination of cash flow and growth then you need to be extra diligent and make sure you have a nice mix of cash flow and an area that can sustain growth. In an area of low unemployment and job growth. Where the median prices are affordable in comparison to the median incomes. Make sure you are investing within the path of progress.
Remember why you are investing and when you do, rarely do the cheapest properties fit the goal that you have on paper because it simply cannot provide you the returns you are looking for.
Value is king, you can get a great price with great returns on properties, THAT will give you everything you want and they are found by doing due diligence, NOT by looking for the best price. Create your plan and stick to your plan.
We KNOW that the biggest problem investors have is finding current, active listings that are available for sale RIGHT NOW. Our list is updated weekly and has ONLY currently listed US Investment Properties for sale.