Should You Buy Property Just Because It’s A Good Deal?

Real Estate Investment StrategiesWith all the great deals we are being inundated with coming from the United States, the pressure is on to figure out the best real estate investment strategies while the deals last. Ken Davidson, local Kelowna accountant, gives his insights on assessing the quality of a “great deal” in real estate.

We have all seen and heard about the great deals coming from south of the border but is buying that property really what you want to do?

Whatever you do, you always have to make sure that it’s still a good business decision on your behalf. I have many people around me buying property in the US right now and my advice to them always starts with a simple question.

Related: What You Need To Know When Buying Your First Investment Strategy

Do You Want To Live There?

Whether it is for retirement, summer vacations or permanent residence, you have to decide if that is a place where you want to live.

If the answer is yes, then go right ahead and purchase the property. If that’s what you want to do, it is a good decision but it’s not necessarily a business decision.

If you want to go down to the United States and buy rental property, you’ve got a bunch of setup and structures that you need to figure out before you go ahead and buy. Just because it is perceived as a good deal, doesn’t mean you can skip out on your due diligence or forget about making sure it’s in the right location and the right market.

Every component in your real estate investment strategies are dependent on the quality of the due diligence process.

Real Estate Investment StrategiesBut What About When The Deal Is REALLY Good?

A lot of people are looking at Arizona because you are able to buy a house for $125,000 that used to sell for $380,000.

Does that make the 125K a good deal? No.

Is that 125K comparable to what today’s market is? One of the biggest mistakes you can make is comparing with history.

Related: 3 Tips For Quickly Increasing Cash Flow

The Motivated Seller

A motivated seller could be like someone who is tired of managing an 8-unit apartment complex on their own and purchased on a buy and hold strategy when they were still passionate about it. They’re getting older now and would simply prefer to get rid of the property rather than continue to deal with 2am phone calls about clogged toilets.

That type of situation can be more prone to getting you a great deal but you still have to do your due diligence and you need to determine how you’re going to take their problem off of their hands. The best deals and most successful real estate investment strategies generally come when you’re taking a problem off someone’s hands!

Foreclosures In Canada Are NOT The Same As The US

In Canada, our bankruptcy and foreclosure rules don’t allow the banks to fire off properties the way they do in the United States. Here in the Great White North, banks are required by law to sell at fair market value, for better or worse. If the banks sell for less, they’re at risk. We don’t get the deals they way our American friends do!

The Bottom Line

So, should you buy the property because it’s a good deal?

Well, I hope that all the properties you buy are good deals, to some extent. The bottom line is that you always need to do your due diligence before you buy. There aren’t one or two real estate investment strategies that are guaranteed to work for every person or every property.

Half the battle is understanding what works best for you but hey, a good deal is a good deal!

 

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