The Savvy Investor Makes Money When they Buy, and When They Sell

By
Managing Real Estate Broker with LoKation Real Estate

The Savvy Investor Makes Money When they Buy, and When They Sell - If you follow the advice of manyBuy Low Sell High gurus in investing, you will here a common theme, that the money is made when you buy, not when you sell. And this is true, you also hear "Buy Low, Sell High!" great advice and all of this makes so much sense. But the truth is that the majority of people will be buying at the same time and create a frenzy like we are seeing in the Denver market and other markets around the country.

These are the followers and the bandwagon jumpers, and Johnny-come-lately's that do not want to miss out and fortunately for most people buying today in Denver's hot market they will  more than likely still see appreciation for the next few years. For example, if the market continues to see 10-12% annual appreciation a homeowner buying a $400K home today can realistically expect that home to be worth around $532K in just three years, those are some nice numbers and a big reason that homes are being gobbled up in Denver, that an an additional 8-10K people moving to Colorado every month.

Opportunity KnocksGood numbers but, the real money was made when a buyer bought a home in the down markets of 2008-2011, most of those homes are worth 2-3 times what they were purchased for, depending on neighborhood. Why do you think Warren Buffett was buying thousands of homes during this period, it is not necessarily a component of the rich getting richer, but the savvy investor knows to buy when everyone else is selling, and to sell when everyone else is buying.

So how does one make money in the current market, the first place I see it is if you own what would be considered a starter home, something in a popular neighborhood that is in good condition and under $400K and you have the means to buy up into the next tier of homes, lets say $500-700K. This market is seeing seasonal slowdowns and many price reductions.

As I study the investor market I occasionally come across what I would consider to be a great investment Home salesand I would like to share these with whoever wants to listen. 

This past weekend as I was looking through the investment opportunity listings, I came across a listing that was priced at $4.6M, not somehing that I can do anything with, and I would have normally just passed on it, however as I started to dig deeper I realized it was another investor selling his portfolio of 14 homes. The investor could sell these all individually and probably get around $6M, however he is packaging them all. All of them are currently rented and all are cash flowing, selling these homes a s a package they average$346K apiece!!! Most of these homes would easily sell for well over $400K or at the very least continue to cash flow and gain an investor a nice residual income. 

Personally I am not in a position to buy these homes, but I am sure someone out there is looking for exactly this type of opportunity. Even if you bought them all and sold 10-12 of them, you would easily own 2-4 outright and have a nice cash cow and no debt. Imagine, borrowing $4.6M and paying it all back within 1-2 years and owning 3-4 properties free and clear.

Anyone have Warren Buffets number?

To see all Denver listings go to this great home search site, its free and easy.

Posted by

 

John Marshall -Fore!

Low-Maintenance Golf Course Living

I have been involved in the Golf Communities through-out Colorado for the past several years. As a contributing writer for Colorado Golf Magazine I write articles regarding new course development and their surrounding communities.

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Comments (2)

Dick Greenberg
New Paradigm Partners LLC - Fort Collins, CO
Northern Colorado Residential Real Estate

Hi John - You make a very good point, and I agree that that step from the entry level into a couple of tiers higher provides a change in market conditions that means opportunity down the road. Nice post.

Sep 06, 2016 06:38 AM
John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

John Marshall - FORE! This is a very good report on investing in real estate.

Sep 06, 2016 11:01 AM