Robert Kiyosaki said “Make your money on the buy, not the sell; this is true in any investment whether it’s real estate, business, or the stock market.” At first, I didn’t understand what he was trying to say. If you’re buying, you’re spending. Right? Cash outflow, not inflow. Right? Wrong.
Think about it like this: when you buy a home at full market value, you haven’t made any money. You have to wait for the home to grow in value to realize any sort of gain. And the gain isn’t real until there is cash in hand. But, when you buy at a discount, that is, when you buy at a price under the home’s actual value, you are paying less to get more.
So, what do I mean? Equity. You pay $200,000 for a home worth $300,000, and if you need to liquidate, you’ve got $100,000 in a snap. You are making money immediately on the buy, because there is a gain (equity) already built into the purchase price. It’s all about the purchase. We make our money on the buy, then we fix and we flip, and in the end, we make even more money on the sell. This is why we do direct mail.
What more quick tips about REI? Listen to The Real Dealz Podcast!