Everyone would love to have a little more money. But growing your net worth isn’t always the same as increasing your income. Sometimes, the best investments are ones you don’t see any initial return on. Just ask Barbara Corcoran, founder of the New York City real estate brokerage The Corcoran Group and regular on ABC’s “Shark Tank.”
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In a TikTok video posted to her account, Corcoran explained to interviewers that there isn’t a “Golden Rule” to real estate, so to speak, but there is one strategy that has always served her well: being willing to overspend on good properties.
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Why You Should Be Willing To Overspend on Real Estate
“I would say that I’m always willing to overspend — be the highest bidder — on any property that’s good because those are always the properties that make the most money,” Corcoran said. Simply put, a property that draws a lot of interest on the market has attracted positive attention for a reason. It means that investors generally agree that it has a lot of potential to earn major returns.
“Forget about the price, like anything you buy,” Corcoran said. While real estate isn’t exactly treating yourself to a new pair of headphones, Corcoran explained a good property will be worth the investment and then some.
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What Makes a Property ‘Good’?
So, what constitutes a good property? Corcoran said location is everything when shopping for real estate. Namely, properties in areas that are in the midst of commercial and residential improvements and that have great light are attractive to renters and buyers. They’re also the properties that attract the most attention from investors, which is why Corcoran explained it’s worth beating other bidders.
She made an important caveat, however. “Leave it alone,” she said. “If you’re willing to not touch that property for five years, you’ll find that real estate is a very slow way to get very, very rich. But most people don’t have the will to not touch it.”
How You Can Purchase Real Estate
Many Americans struggle to afford rent, so how are you going to afford an investment property? It’s a fair question and one that doesn’t have any easy answers. That said, there are still some ways you can make it happen:
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Maintain strong credit: Your credit score is one of the most important factors lenders consider. Making debt payments on time and avoiding significant amounts of credit card debt demonstrate to lenders that you’re a safer borrower.
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Get a high-yield savings account: Today, some lenders offer mortgages with down payments as small as 3.5% of the purchase price. That’s just $17,500 on a $500,000 property. $17,500 is a lot of money, but it’s much more achievable with a high-yield savings account that pays you strong interest rates every month.
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Consider partnerships: Yes, buying a property with partners will cut into your profits, but it will also make buying property much more attainable. If three people contribute $10,000 toward a $500,000 property, it will make the mortgage more affordable for everybody.
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This article originally appeared on GOBankingRates.com: Barbara Corcoran: Why You Should Be Willing To Overspend on Real Estate Investments