You Will Never Lose Money on a Property You Don’t Buy

You will never lose money on a property you don’t buy

This is the last article of a series that is being posted to my website because blogs read backwards and this item needs to read forward. You may read everything published to-date at http://www.segrestrealty.com Hit the “Investment Guidelines” link.


This may sound overly simplistic. Think about it. How many times have you said “I could have bought that property for $*****? The fact is you didn’t buy it. You did not make the huge profit that would have come in your mind. You did not have to make the payments for 30 years and deal with the tenants and the maintenance and the upfit.

Up until a year ago almost every property we see would look good in retrospect. You could have bought a property 15 years ago for $90,000. Today it is worth $210,000. Wow, what a missed opportunity. With compounding the profit was only 5.8% per year. The opportunity missed was even less spectacular if part of the original price was financed. It is quite rare to have a significant positive cash flow on a residential property that is purchased with OPM (other people’s money). A significant negative cash flow is more common. If the owner’s effort is factored in the negative cash flow is even greater. Positive cash flows are more common in commercial properties; but the significant appreciation is not.

The new investor still has plenty of opportunities. They need to be scrutinized more closely. Frequently a buyer is heard to say. I bought a property worth $300,000 for $100,000. The truth is property is worth $100,000; because that is all it would bring on the market. A real business approach must be applied to investment real estate. This will be the source of future wealth building.

David Segrest is a REALTOR® in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com He is also a contributor on Argentina to: http://realestatebloginternational.com/