Hi, this is Jochen Siepmann, the author of The Property Apprentice; How To Earn While You Learn.
In today’s episode, I’ll be sharing with you the timing when you should make money in property. So when should you make money in property? Most people who are not investing say of course when you sell a property. From a pure cash flow perspective, that is, of course correct. However, we should make money in property when we buy the property. On the day we buy, we should make money.
How do we do that? Quite simple, we buy below the market value. If for example, a property has a fair value, comparisons by the bank or the value of a 100,000 Dollars, Pounds, Euros or whatever currency you want and you are able to buy it at 75 or 80 thousand dollars or in any currency. Then you immediately made a profit of 20,000-25,000 and that’s what I mean of below market value.
So even if, your investment and the market was down a little bit, you are still positive because you could resell it for a higher price. Sometimes we call this, buy low and sell low because you can also sell below the market value. So some other investor will inform you, but by having bought it far below market value, you are for good equity and our time should build up further. If you make money on the day you buy and the cash will follow on the day you sell. So how do we find this opportunities?
There are few different ways, but first you have to know the market so you’d know what the market value is. Then there are some agents who specialize in this kind of thing or can leverage in my context. There are few different websites, you can also look into auctions but I cover auctions and you have to be careful in buying properties there. But its a good way to find below market value properties as well and there are many more ways. Make money when you buy, not when you sell.
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