In most markets, prices are largely inflexible. Whatever the market value of gold is at a given moment, you’re stuck with it. Same with stocks- if Microsoft’s stocks are trading at 200 dollars, that’s what you’re paying. You can’t really haggle. Real estate, however, is a different story.
It’s not uncommon for properties to be sold for under their market value. This leads to situations of instant equity.
Instant equity is a phenomenon that occurs when you purchase something at a discount. When you purchase a property for less than its market value, you automatically increase your net worth. This is because, if you were to sell or refinance the property later, it would be worth more than you paid for it, and you would gain that difference.
Because of this, properties that provide you with instant equity are a good investment. The equity you have from these properties can provide a financial buffer in case of problems with them.
So, it seems obvious that buying at a discount is a smart decision. However, you might still be wondering why people choose to sell their properties for less than market value. As it happens there are a multitude of reasons someone might choose to undercharge for what they own.
They might be experiencing financial difficulties that require that they liquidate their assets sooner rather than later. In that instance, they would be more interested in moving the property quickly and efficiently, rather than for top dollar. Someone might be going through a divorce and needing to sell their house in order to settle the case. It can even be as simple as someone inheriting a property they don’t want, and trying to sell quickly simply to wash their hands of it.
Regardless of the reason, people selling their properties on the cheap is a great opportunity for you as an investor. If you’re able to buy at a discount you’re already better off than you were before. Real estate is a rare example of a market where you can barter, and this can be used to your advantage. For this reason and more, real estate is a great choice for investing.
Liezel Layacan is a real estate investment company. We have been actively involved in the GTA area real estate investing for a number of years. Our mission is to provide quality housing for quality tenants, while at the same time providing an above-average return on investment (R.O.I) for our investor partners and ourselves. It is truly a win-win-win way of investing!
Liezel offers her investor partners hands-free investment opportunities. If you are interested to learn how to earn an above-average return on your investment, backed by a solid asset, and without a hassle of being a landlord, please contact Liezel.