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Just Because It’s Cheap, Doesn’t Mean You Should Buy It

"There is hardly anything in the world that some man cannot make a little worse and sell a little cheaper, and the people who consider price only are this man's lawful prey." - John Ruskin

We had begun been investing in the Buffalo, NY market mainly because the housing prices were so cheap.  We searched many areas and dollar for dollar we couldn’t find a better return on our investment (ROI) at that low of an entry price point.  It was perfect for first time investors like us and had proven to be a great staple in our portfolio.

Initially we wanted to buy anything and everything that was as cheap as possible.  But after much experience in the troubles that came with those properties, We realized that just because it was cheap, didn’t mean we needed to buy it.  Now we still look for the best bargains but often achieve that through our buying power in acquiring large investor portfolios of multiple properties.  Every now and then, we can pick up one or two properties that meet our criteria due to extenuating circumstances that result in a very motivated seller.  But at the end of the day, cheap just doesn’t always make more sense.  Now we’d rather spend more money on a property to have less of a headache later.  We still can get a property for under fifty thousand dollars in certain areas so how can we really complain?

Now this isn’t to say that you shouldn’t negotiate hard to get the best deal.  But we always tell clients that getting the cheapest price shouldn’t overpower the deal.  If a seller is asking $150,000 for a duplex and the return on investment (ROI) is 15% and that meets your investment goals then you should make an offer for less.  Since your offer is not based on getting the purchase price down to meet your ROI goal, then your offer should be reasonable.