SS285: Buying at a Discount, Selling at a Discount
Buying a property below market value can look like a great opportunity—but what if the reason you’re buying at a discount is the same reason you’ll eventually have to sell at a discount? In this episode of Strategy Saturday, Charles Carillo discusses the hidden risks of purchasing properties with permanent valuation penalties and why investors should understand exactly what is causing a property to trade below comparable properties. Charles shares the example of a 3-unit property that had been sitting on the market at a discount. After reviewing the location, he discovered that the property was surrounded by industrial buildings, creating a permanent disadvantage compared with nearby residential properties. In this episode, you’ll learn: How an entry discount can be offset by lower rents, reduced tenant demand, longer vacancies, and higher concessions. Why the next buyer may expect the same—or an even larger—discount when you sell. The difference between external obsolescence and functional obsolescence. Examples of permanent issues, including power lines, highways, industrial surroundings, poor layouts, low ceilings, and inadequate parking. When buying a permanently discounted property may still make financial sense. Why cash flow becomes especially important when the property may be difficult to sell during weaker market cycles. Properties with permanent issues can still present opportunities, but investors need to understand that they usually cannot renovate their way out of a poor location. Connect with the Global Investors Show, Charles Carillo and Harborside Partners: ◾ Setup a FREE 30 Minute Strategy Call with Charles: http://ScheduleCharles.com ◾ Learn How To Invest In Real Estate: https://www.SyndicationSuperstars.com/ ◾ FREE Passive Investing Guide: http://www.HSPguide.com ◾ Join Our Weekly Email Newsletter: http://www.HSPsignup.com ◾ Passively Invest in Real Estate: http://www.InvestHSP.com ◾ Global Investors Web Page: http://GlobalInvestorsPodcast.com/
