I overheard someone say it doesn’t matter if you overpay for a property because it will go up in the end anyway.

Lets see how that plays out in the following example.

Consider two people Jake and Dylan who each buy a property for $10m.

Suppose Jake overpays … and pays $10m for a property that is worth $9m.

And suppose Dylan gets a great deal … paying $10m for a property that is worth $11m.

Now assume they sell many years later, when the market has doubled, and they both sell at fair market value.

Jake’s property will be worth $18m … an $8m profit.

Dylan’s property will be worth $22m … a $12m profit.

Yes, they both made profit … but the one who bought well-made 50% more profit than the one who overpaid, which in this case is $4m. Four. Million. Dollars.Of course if you’re buying the property for yourself to live in, then it is not purely a financial asset. In that case, if you really want the property you might be willing to overpay for the same reason you might buy a Ferrari. As long as you’re under no illusion about the fact that neither is an optimal wealth creation move.