Sorry, But “You Make Money When You Buy” Is a Lie

Sorry, But “You Make Money When You Buy” Is a Lie

6 min read
Craig Curelop

Craig Curelop (aka the FI Guy), is stationed in Denver, Colo., and is a real estate agent, investor, author, and employee of BiggerPockets. He is primarily known for taking a very aggressive approach toward achieving financial independence.

Starting with $90,000 in student loan debt and a negative $30,000 net worth in 2017, Craig used various tactics to make more, spend less, and invest the difference wisely to become financially independent 2.5 years later in 2019. In over 50 articles, Craig has written about all of these strategies and more on the BiggerPockets Blog.

Craig’s story has caught the attention of media outlets like The Denver Post and the BBC and many real estate/personal finance podcasts, including ChooseFI, Side Hustle Nation, the Best Ever Real Estate Podcast, not to mention a repeat guest on the BiggerPockets Real Estate (#252 and #350) and the BiggerPockets Money (#35 and #95) podcasts.

Craig has read hundreds of books, listened to thousands of podcasts, and talked to thousands of people in the real estate and personal finance community. With all of the knowledge gained, he was able to write a book called The House Hacking Strategy, which is the perfect blend of real estate and personal finance.

Over the past 2.5 years, he has done three house hacks, a flip in Jacksonville, Fla., and lent on a condo-conversion in Boston, Mass. He is now looking to step up his real estate game by doing BRRRRs in Denver and other areas.

Craig earned a bachelor’s of science in Business Administration with a concentration on Finance and Management Information Systems while minoring in Economics at Northeastern University.

Real estate broker in Denver, Colo.

Instagram @thefiguy

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“You make money when you buy real estate.” This is the age-old saying that everyone knows to be true.

There is a reason why it’s so popular and why everyone says it. It’s true. But it’s only true for 95 percent of real estate.

There is a small subsegment of real estate where the purchase price does not matter. If you know anything about me, you know that I am talking about house hacking.

I have taken a bunch of future house hackers out to look at houses in the Denver metro area and have talked to hundreds more. Almost every single one gets hung up about the purchase price at one point or another. They all try to shave off $10,000 to $20,000—whether it is by offering well below listing price or trying to nit-pick an inspection.

When flipping, wholesaling, or BRRRRing property, this $10,000 to $20,000 is huge. It is cutting directly into your profits. With buy and hold investing, and even more so with house hacking, your plan is to hold that puppy for the long haul. The $10K to $20K difference is going to translate to an extra $50 to $100 per month.

That may sound like a lot, but that is peanuts when it comes to what you’re missing out on by delaying the deal.

Why? Because when you house hack, it matters more that you get started rather than trying to find a home run of a deal. It is more important that you start saving $700 per month in rent, start adding hundreds of dollars of equity per month through appreciation and loan paydown, and most importantly, start that year timer so you can do it again in 365 days!

Don’t believe me? Let’s look at a deal I just went through with a client.

In this scenario, we will compare purchasing a property for $385,000 now versus finding a great deal and purchasing one for $370,000 six months from now. We will assume it takes six additional months to find the better deal than it would have just to pick the more expensive option now.

Scenario 1: Buy Immediately

Let’s visit Connor. Connor is eager to start house hacking, and he does exactly as he should. He gets pre-approved by his lender, finds a reputable agent, and is ready to start looking at properties.

As he is looking, his agent explains to him what I just explained to you above: It is more important to get into a house hack than it is to get a slam dunk deal on purchase price. Even though this goes against the classic real estate investing mantra, “You make money when you buy,” he believes his agent. After all, the agent has done it before and has seen it multiple times over.

He finds a perfect single family home. It’s a large five-bedroom, three-bathroom for $385,000. Rather than trying to bleed every last dime out of the seller, he just wants to get the deal done and start saving on rent, building equity, paying down the loan, and most importantly, starting the one-year timer for him to purchase the next one.

two men wearing casual clothes sitting on a brown couch drinking coffee from mugs and talking

He offers the full price of $385,000 with $10,000 of earnest money down and a clause that states he won’t make the seller fix anything that is under $1,000. This way, the seller knows that Connor is serious, and he is not going to nickel and dime them for a broken lightbulb.

For obvious reasons, the sellers are pleased with this offer; it is accepted. The inspection and appraisal come back clean, and Connor gets to the closing table one month from when he started looking.

Here are what the numbers look like:

  • Purchase Price: $385,000
  • Down Payment + Closing Costs: $20,000
  • Estimated Rent (Includes Rent Savings): $3,750
  • Mortgage Payment (PITI + PMI): $2,175
  • Reserves: $400
  • Total Cash Flow: $1,175

Look at that!

Despite the fact that Connor offered full listing price, giving the sellers exactly what they asked for, he is still able to receive a cash-on-cash return of 70.5 percent. Sounds like a win-win to me!

Before we move on to the second scenario, let’s look at the bigger picture: the net worth return on investment (NWROI). This takes into consideration all of the wealth-building factors of real estate, including cash flow, appreciation, and loan paydown, then divides it by the down payment plus closing costs.

Connor’s NWROI in Year 1:

  • Cash Flow: $14,100
  • Loan Paydown: $6,500
  • Appreciation: $0
  • Total Net Worth Gain: $20,600
  • Total Down Payment: $20,000
  • NWROI: 103%

Connor earns a NWROI of 103 percent with very little work, stress, and time wasted getting into the deal.

Next, let’s visit Zach. Then, we will compare the two over a 10-year period.

Related: 3 House Hacks in 3 Years & Now I’m Financially Free—Here’s Exactly How I Did It

Scenario 2: Find a Perfect Deal

Meet Zach. Zach is a bit more timid than Connor. He has heard the age-old advice, “You make money when you buy,” and he is going to fight tooth and nail for the best deal.

He starts the process off just like Connor: by finding a reputable agent and a lender. After six months of trying to find the “perfect” deal, he has finally found one.

It is exactly like Connor’s—a five-bed, three-bath for $385,000. However, Zach wants to be sure that he’s getting the best possible deal, so he low-balls an offer at $350,000. The sellers scoff at it, so Zach comes back with an offer of $360,000. They go under contract for $380,000.

During the inspection period, Zach is very nit-picky with all the inspector has called out. He demands $10,000 off the purchase price. After much back and forth, he gets his $10,000 off.

Now, Zach is purchasing the property for $370,000.

In order to compare apples to apples, we are assuming that everything is consistent in this example compared to Connor’s example, except for the purchase price and variables that change based on the purchase price.

Here are Zach’s numbers:

  • Purchase Price: $370,000
  • Down Payment + Closing Costs: $17,000
  • Estimated Rent (Includes Rent Savings): $3,750
  • Mortgage Payment (PITI + PMI): $2,100
  • Reserves: $400
  • Total Cash Flow: $1,250

As you can see, Zach is rewarded for all of the extra work and time he put in by getting a cash-on-cash return of 88.2 percent, rather than Connor’s 70.5 percent.


How does this look from an NWROI perspective in Year 1?

  • Cash Flow: $15,000
  • Loan Paydown: $6,100
  •  Appreciation: $15,000
  • Total Net Worth Gain: $36,100
  • Total Down Payment: $17,000
  • NWROI: 212%

 Whoa! Look at that!

The numbers don’t lie, right? In both scenarios, from a cash-on-cash and an NWROI perspective, it is obvious that Zach is getting compensated very fairly for the extra time and effort he put in, right?

This is how most people think, and this is why you are on BiggerPockets reading this article—so you don’t end up selling yourself short by not seeing the forest through the trees. This comparison is missing one critical element. It’s an element that many new investors do not consider: opportunity cost and time.

Related: Should You Pay Off Student Loans or Invest in a House Hack?

Comparing Both Scenarios Over Time

The one incredibly important element missing in this example is the element of time. As a reminder, in Connor’s example, he purchases a property immediately. He doesn’t really care about getting the best deal. He just wants to get in.

Zach, on the other hand, is going to fight tooth and nail for every dollar he can save. Because of that, it is going to take six additional months to find the perfect deal for him.

Let’s compare Connor’s vs. Zach’s portfolio over the course of 10 years. Because it takes Zach an extra six months to find a property each time, over the course of a 10-year period, he is only able to buy five properties. Connor, on the other hand, is not picky. He is therefore able to purchase one property every year for those 10 years.

At the end of 10 years, Connor has 10 properties and Zach has five. For the sake of argument and ease of calculation, we are going to assume that each consecutive deal is exactly the same as the one before.

How does this look over a 10-year span? Check out this chart:

Whoa! Look at that difference.

Over the course of 10 years, Connor, who again did not get the best deal but instead just got in ASAP, has a net worth that is almost $1 million more than Zach, who got a “good deal” on each of his house hacks.


I think I have made my point pretty clear. While all of the advice tells you that “you make money when you buy,” this simply is not the case when house hacking. The power of house hacking does not come in buying it at a killer deal.

The power is being able to acquire cash-flowing properties for a low amount down every single year on the year. For every month you do not have that additional deal, you are losing out on thousands of dollars of net worth gain.

Happy house hacking!

Questions or comments about the above argument?

Let’s talk below in the comment section.