Make Money When Buy?
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Make Money When Buy? (by WMH [NC]) Oct 3, 2017 7:09 AM
       Make Money When Buy? (by Mary [MI]) Oct 3, 2017 7:19 AM
       Make Money When Buy? (by Deanna [TX]) Oct 3, 2017 7:20 AM
       Make Money When Buy? (by Deanna [TX]) Oct 3, 2017 7:22 AM
       Make Money When Buy? (by NE [PA]) Oct 3, 2017 8:01 AM
       Make Money When Buy? (by LisaFL [FL]) Oct 3, 2017 8:11 AM
       Make Money When Buy? (by Robert J [CA]) Oct 3, 2017 8:19 AM
       Make Money When Buy? (by Lynda [TX]) Oct 3, 2017 8:23 AM
       Make Money When Buy? (by Lynda [TX]) Oct 3, 2017 8:23 AM
       Make Money When Buy? (by S i d [MO]) Oct 3, 2017 8:35 AM
       Make Money When Buy? (by WMH [NC]) Oct 3, 2017 8:47 AM
       Make Money When Buy? (by NC INVESTOR [NC]) Oct 3, 2017 9:25 AM
       Make Money When Buy? (by JR [ME]) Oct 3, 2017 9:30 AM
       Make Money When Buy? (by JR [ME]) Oct 3, 2017 9:30 AM
       Make Money When Buy? (by Andrew, Canada [ON]) Oct 3, 2017 10:07 AM
       Make Money When Buy? (by WMH [NC]) Oct 3, 2017 10:30 AM
       Make Money When Buy? (by Tex [TX]) Oct 3, 2017 11:53 AM
       Make Money When Buy? (by Tex [TX]) Oct 3, 2017 11:54 AM
       Make Money When Buy? (by WMH [NC]) Oct 3, 2017 12:06 PM
       Make Money When Buy? (by BRAD 20,000 [IN]) Oct 3, 2017 12:29 PM
       Make Money When Buy? (by Tex [TX]) Oct 3, 2017 1:11 PM
       Make Money When Buy? (by Sisco [MO]) Oct 3, 2017 1:32 PM
       Make Money When Buy? (by WMH [NC]) Oct 3, 2017 2:14 PM
       Make Money When Buy? (by Andrew, Canada [ON]) Oct 3, 2017 2:53 PM
       Make Money When Buy? (by Chris [CT]) Oct 3, 2017 4:57 PM
       Make Money When Buy? (by Pmh [TX]) Oct 3, 2017 5:05 PM
       Make Money When Buy? (by Andrew, Canada [ON]) Oct 4, 2017 6:09 AM
       Make Money When Buy? (by Tex [TX]) Oct 4, 2017 6:47 AM
       Make Money When Buy? (by J [FL]) Oct 4, 2017 11:50 AM
       Make Money When Buy? (by TA [CA]) Oct 4, 2017 1:00 PM
       Make Money When Buy? (by Pmh [TX]) Oct 4, 2017 2:32 PM
       Make Money When Buy? (by GKARL [PA]) Oct 4, 2017 5:43 PM
       Make Money When Buy? (by Chris [CT]) Oct 5, 2017 1:27 PM
       Make Money When Buy? (by Jeff [OH]) Oct 5, 2017 7:06 PM
       Make Money When Buy? (by Pmh [TX]) Oct 6, 2017 2:26 PM
       Make Money When Buy? (by WMH [NC]) Oct 6, 2017 2:43 PM

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Make Money When Buy? (by WMH [NC]) Posted on: Oct 3, 2017 7:09 AM
Message:

I hear this all.the.time. here. That you make the money when you buy.

Please explain this philosophy?

--173.22.xx.xx




Make Money When Buy? (by Mary [MI]) Posted on: Oct 3, 2017 7:19 AM
Message:

It means that you need to buy a property at the RIGHT PRICE. If you over pay for the property you have no chance to make any money.You're doomed, there are no remedies. --99.62.xxx.xxx




Make Money When Buy? (by Deanna [TX]) Posted on: Oct 3, 2017 7:20 AM
Message:

Most houses I buy, I can rent for $450-$550/month. So it brings me $5-$6k/year. Then you subtract things like expenses (plumbing issues, replace a fridge), and taxes, and insurance, and vacancy-related costs, and whatever. So I'm not taking home $5-$6k/year... I'm taking home maybe $3-$4k.

I can buy a house for $70 or $80k, turnkey. It will still rent for $450-$550/month, and I'll still have $3-4k in my pocket at the end of the year.

Likewise, I can buy a house for $10k and put another $10k of work into it, and it will rent for $450-$550/month, and I'll still have $3-4k in my pocket at the end of the year.

So I'm able to save myself $50k right off the bat by having vision-- buying a house that's been let go and putting in work-- rather than trying to compete with all the ordinary homebuyers buying ordinary houses and looking for something turnkey because they don't want to paint, or replace flooring, or repair a roof, or install central heat & air.

It will take me a long time to earn $50k by just collecting rent. But I can keep $50k in my pocket by buying smart. --96.46.xxx.xx




Make Money When Buy? (by Deanna [TX]) Posted on: Oct 3, 2017 7:22 AM
Message:

And if I bought a house at $70-$80k, it would take me 11, 12, 15 years to gross back whatever I had put into it. If I have $20k into a project, I'll gross that money back in three or four years. So it will make its money back, and I can move on to profit, much faster as well. --96.46.xxx.xx




Make Money When Buy? (by NE [PA]) Posted on: Oct 3, 2017 8:01 AM
Message:

It means you make it on paper before you buy it. --174.201.xx.xx




Make Money When Buy? (by LisaFL [FL]) Posted on: Oct 3, 2017 8:11 AM
Message:

I think it just means be sure you don't over pay for the house in the first place.

I heard of people buying during the boom who were taking a loss each month as rent didn't cover their expenses. They counted on eventual appreciation and that did turn out well.

I have one I did not buy well. But I wanted it for a reason so I took a risk. Paid $150,000 for it. Now I've had it since 2005 and have made an average of $6000 a year on it, or $72,000. Only now could I sell it for what I paid for it, $150,000. Meaning I made $72,000 off it.

Five years a go I would have earned $42,000 in rent but I would have been lucky to have sold it for $100,000. So my $150,000 investment would have made me $142,000, or rather lost me $8,000 in the end.

I bought another one in 2011 for $108,000. I put $45,000 into it to get it rent ready so a total of $153,000. Over the past six years I've earned roughly $66,000 in rent and it would sell now for $285,000. So my $153,000 investment resulted in a $198,000 gain over six years.

So one good purchase and one bad one in those examples. --173.170.xxx.xxx




Make Money When Buy? (by Robert J [CA]) Posted on: Oct 3, 2017 8:19 AM
Message:

When I buy a multifamily property I have a plan and strategy meaning that after all is said and done, I will own something that either produces positive cash flow OR I have lots of equity that if I sell -- I will make a profit NOW, not years up the road!

Some "investors" expect that in 10 years they will turn a profit or will start of pay off after years of hard work -- sweat equity not "Making money on the buy". --47.156.xx.xx




Make Money When Buy? (by Lynda [TX]) Posted on: Oct 3, 2017 8:23 AM
Message:

I've always hated that phrase! You do NOT make money when you buy--you PAY money when you buy. You only make the POTENTIAL for money when you buy right.

You never realize that potential until you SELL. If you bought it right, you get that money in your hand/acct when you SELL. Until then it is sitting locked up, and could be locked for 10-20 years, until you SELL.

You make POTENTIAL when you buy, and you make ACTUAL money when you SELL. --108.87.xx.xxx




Make Money When Buy? (by Lynda [TX]) Posted on: Oct 3, 2017 8:23 AM
Message:

I've always hated that phrase! You do NOT make money when you buy--you PAY money when you buy. You only make the POTENTIAL for money when you buy right.

You never realize that potential until you SELL. If you bought it right, you get that money in your hand/acct when you SELL. Until then it is sitting locked up, and could be locked for 10-20 years, until you SELL.

You make POTENTIAL when you buy, and you make ACTUAL money when you SELL. --108.87.xx.xxx




Make Money When Buy? (by S i d [MO]) Posted on: Oct 3, 2017 8:35 AM
Message:

Deanna gave a very good explanation, but NE inserts a wise word of caution.

You "make money" with any investment based on performance. With real estate, you don't truly know what your end result will be until all the incomes and expenses are tallied and the property is sold. Then you add up your P&L (profits/losses) and whatever the bottom line is determines how you did.

So obviously like most businesses, we try to acquire our inventory for the lowest price possible while still accomplishing all our goals. For example...

I bought my first house in 2005 for $36,000 and it rented for $425. Today it rents for $500 and I could probably sell it for about $38,000.

I bought a house earlier this year for $14,000, put $2K in it, and I could sell it today for $30,000...easy, to an investor. It rents for $550. More rent + more "spread" on the profit. Even if I collect no rent, I still made $14,000 on this purchase where the 2005 purchase sale would only make me about $2,000.

This assumes all factors are held equal and we don't account for different capital gain rates, depreciation, recapture, etc. You don't really know how well you did until you sell. --173.19.xx.xxx




Make Money When Buy? (by WMH [NC]) Posted on: Oct 3, 2017 8:47 AM
Message:

Aha. That explains it very well, Lisa.

We made one purchase that was a good price when purchased during the boom (2004) and has made us good money every every year since then, but is probably only worth (13 years later) about $50-$100k more than originally paid. So not a lot of appreciation.

However we purchased a virtually identical property - right around the corner - for $150k LESS than the first one during the bust - 2009. And it has made the same good money, and is now worth almost double what we paid for it.

Still happy with both purchases, but the second certainly made us more money at the purchase...

EXCEPT. The first one was purchased with a mortgage, so ROI is better than the second, which was cash! --173.22.xx.xx




Make Money When Buy? (by NC INVESTOR [NC]) Posted on: Oct 3, 2017 9:25 AM
Message:

As a REALTOR that expression is not confined to investment properties. I hear it all the time from buyers looking for a home especially in a hot market where there are bidding wars. Homebuyers relocating for employment who have no idea if they will be here long term are especially concerned with not overpaying.

For others it has as much to do with the upside of a given neighborhood with a higher long term ceiling for appreciation than about the actual price of entry.

Then there are the majority of buyers who fall in love with the house and/or neighborhood who overpay and will rarely get back what they put in.

As an investor I do look at it differently and as Deanna says it is not only the cost to buy it is the total upfront costs.

I would never buy an investment property that I didn't think I could A: make money on it out of the gate and B: didn't see a longer term benefit.

There are 5 homes that I felt I overpaid for. They were in neighborhoods that had seen better days. I gambled that their proximity to the city and the rapid growth in this market would eventually pay off. Today those are the crown jewels of my investment properties. I get top dollar for rent and I could sell each one of them for 3.5 to 4 times the amount I have invested in them. --75.181.xxx.xx




Make Money When Buy? (by JR [ME]) Posted on: Oct 3, 2017 9:30 AM
Message:

Thesaying reflects the truism that, in general, it is much easier to buy a property at below the market value than to sell one above market value. --192.159.xxx.xxx




Make Money When Buy? (by JR [ME]) Posted on: Oct 3, 2017 9:30 AM
Message:

The saying reflects the truism that, in general, it is much easier to buy a property at below the market value than to sell one above market value. --192.159.xxx.xxx




Make Money When Buy? (by Andrew, Canada [ON]) Posted on: Oct 3, 2017 10:07 AM
Message:

I find that a frustrating cliche (sp).

It seems to be the key "advice" in most real estate investment books. Geee....no kidding, buy below market and make a profit, repeat and so on and so on.

While it seems to work in depressed areas with motivated sellers, in my 30 years in toronto, it very very seldom works. There are simply sňoooooooo many buyers chasing deals that even in slow markets there is no reason to give away a property.

Occassionally, in a slow market, one can find a distressed property that needs work and can be had a FAIR price, but if one were to simply buy and resell, they would be unlikely to net any profit after expenses.

Here, profit often comes more in rehabbing a property, repurposing a property or turning it around financially, or buy and hold.

--70.48.xxx.xx




Make Money When Buy? (by WMH [NC]) Posted on: Oct 3, 2017 10:30 AM
Message:

For us Buy & Hold is the way, and NOT for the appreciation. Houses here are simply too expensive to "fix and flip." But buying one that needs fixing to make it pretty, then doing so, and renting it long-term to generate a steady cash flow is the way to go.

Even when we pay close to so-called "market" price, that's fine if it's rent-ready and starts generating cash right away. --173.22.xx.xx




Make Money When Buy? (by Tex [TX]) Posted on: Oct 3, 2017 11:53 AM
Message:

Really don't understand what your guys are talking about. first of all I don't have anything that leases for less then 750 and secondly maybe im doing something a little different but I walk away fro the closing table with as much as 5k to take a little vaca....

My market is between 25-45K and when I strip equity everything goes on 12 to 15yr amort. --10.2.xx.xxx




Make Money When Buy? (by Tex [TX]) Posted on: Oct 3, 2017 11:54 AM
Message:

I stand with my position that we make the money when we buy the property. --10.2.xx.xxx




Make Money When Buy? (by WMH [NC]) Posted on: Oct 3, 2017 12:06 PM
Message:

The 5k is part of a mortgage, though, correct? So you do have to pay it back? --173.22.xx.xx




Make Money When Buy? (by BRAD 20,000 [IN]) Posted on: Oct 3, 2017 12:29 PM
Message:

Interesting to read all the varying interpretations of this simple phrase.

As an investor I grew up with the phrase using the meaning the potential for profit starts at the purchase. Pay too much and I'll never make money when I sell. A lower price, when mortgaged, means a lower payment, leading to more monthly cash flow when renting.

BRAD

--68.50.xx.xxx




Make Money When Buy? (by Tex [TX]) Posted on: Oct 3, 2017 1:11 PM
Message:

WMH yes of course its on the mortg. but even at that the property will still cask flow, so what does it matter its 5K that I can draw that wouldn't have been able to unless I bought the property. So I bought the prop and cashed out 5K at closing and it will still cash flow. Really not that hard to understand.

Don't complicate it....its real estate. We make the money when we buy the property. --10.2.xx.xxx




Make Money When Buy? (by Sisco [MO]) Posted on: Oct 3, 2017 1:32 PM
Message:

"You make your money when you buy, you collect your money when you sell."

That is the old cliche.

It means that I won't make money from my refurb job above what I could charge to refurb their house, I won't make money marketing my house above that which I could market someone else's house. If I am to make any money, it will be because I bought at below market price or he the market price increased while I have held it. --72.172.xxx.xx




Make Money When Buy? (by WMH [NC]) Posted on: Oct 3, 2017 2:14 PM
Message:

But what if you never intend to sell? What if you intend to buy and hold and pass it on? --173.22.xx.xx




Make Money When Buy? (by Andrew, Canada [ON]) Posted on: Oct 3, 2017 2:53 PM
Message:

I KNOW what the phrase means. Im saying it is extremely difficult in toronto to buy below market value.

If I could buy houses for 25 to 45k and rent them for 550 a month.....then YES, I could be making money when I buy. But here a parking spot can be 45k plus. --70.48.xxx.xx




Make Money When Buy? (by Chris [CT]) Posted on: Oct 3, 2017 4:57 PM
Message:

Equity and cash flow from day one, any appreciation down the road because of market conditions etc is just icing on the cake.

So if the property is worth say $10 today, you need to buy it for less than that. Some people are happy paying $9, right now I have one I'm paying about $.50 cents for.

It all depends on your market, and what you are trying to do. I'd happily pay near top dollar for a killer location, so say $8 or $9 out of $10. Some idiots especially down in Fairfield county will happily write checks for $12 if its worth $10. --24.45.xxx.xx




Make Money When Buy? (by Pmh [TX]) Posted on: Oct 3, 2017 5:05 PM
Message:

I will buy at mkt price if my roi pencils out. cash on cash is the only formula I use. equity on paper has no effect on that equation.. equity is only realized when sold. --166.137.xxx.xxx




Make Money When Buy? (by Andrew, Canada [ON]) Posted on: Oct 4, 2017 6:09 AM
Message:

In toronto, currently and for years, paying $12 or 14 for $10 rental property is the norm.....and then you wait and hopefully it will appreciate in value to create a profit.

"You make your money when you buy" hasnt applied here for many years. ..are we over due for a correction? I thought so.... yet prices continue to climb. --70.48.xxx.xx




Make Money When Buy? (by Tex [TX]) Posted on: Oct 4, 2017 6:47 AM
Message:

Pmh again have to disagree with your take....equity is built in when you purchase, if bought right. My lender allows me to take up 90% market value maybe because of my history with them. --10.2.xx.xxx




Make Money When Buy? (by J [FL]) Posted on: Oct 4, 2017 11:50 AM
Message:

To me it always thought it meant use the "50% rule" when you buy, in making your offer, and buy based on the cash flow from rents after expenses that you will get, and not buy solely to speculate on appreciation. --72.188.xxx.xxx




Make Money When Buy? (by TA [CA]) Posted on: Oct 4, 2017 1:00 PM
Message:

This is the unicorn of real estate investing. It is easier said than done. If you buy a property worth $400k for $300k, it doesn't matter if you rent it out as is, repair it and hold on to it, or resell it, you will make money. Sellers are trying to get as much money as possible, and there are plenty of buyers out there. You will need to find property before it listed for sale to get the best deals. --75.149.xx.x




Make Money When Buy? (by Pmh [TX]) Posted on: Oct 4, 2017 2:32 PM
Message:

yes Tex, correct in that sense you have more equity to borrow against. --104.218.xxx.xx




Make Money When Buy? (by GKARL [PA]) Posted on: Oct 4, 2017 5:43 PM
Message:

I think TA is correct. One is more likely to buy at a steep discount before the property is listed with a realtor. To me, making money on the buy by buying below market is essential. I prefer turn around situations where I can force equity by enhancing the income. Of course that best done with commercial properties. --207.172.xx.xxx




Make Money When Buy? (by Chris [CT]) Posted on: Oct 5, 2017 1:27 PM
Message:

TA its about finding motivated sellers, and or sellers that don't know what they have.

Pmh I disagree cash flow pays the bills but equity makes you rich. I can leverage against it to buy more deals or trade it up into a better property.

Or when I get old enough say I'm done, sell and walk away with a nice check to live off of, preferably fishing every day somewhere warm.

--24.45.xxx.xx




Make Money When Buy? (by Jeff [OH]) Posted on: Oct 5, 2017 7:06 PM
Message:

Tex,

Not sure how old you are or how long you have been an investor, but the way you talk about mortgages it makes me hark back to the way this board was in the mid 2000’s. All you would hear is OPM this and OPM that. Just be careful...90% equity can change very quickly! T --67.23.xxx.xxx




Make Money When Buy? (by Pmh [TX]) Posted on: Oct 6, 2017 2:26 PM
Message:

Interesting responses and I like to think about every one. It is all a question of objectives. do you make $, on paper, when you buy low. yes, but only when realized on when you sell the property. being able to get higher loan proceeds on equity is not making $ in itself. Cash on cash return is how I measure roi. instant equity is a paper gain but that does not mean making $ in the bank. And that is how I measure making $. --104.218.xxx.xx




Make Money When Buy? (by WMH [NC]) Posted on: Oct 6, 2017 2:43 PM
Message:

Jeff, good point. --173.22.xx.xx



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