The Cost Averaging Strategy for Real Estate Wealth

By Chris Doherty

Christian Doherty lists and sells more homes than any other agent in the Greater Lowell, Massachusetts market with over 300 homes sold in the past 12 months. Chris is ranked in the top 1% of all agents in the United States.

People always ask me the same question: “Should I buy real estate now, in this market?” I understand the hesitation, but my answer rarely changes, and it goes back to a lesson I learned a long time ago from a man who shaped how I think about money.

It started with an investor who took me under his wing. When I was growing up, I didn’t have a lot of resources or money, but I became close with an investor at a young age, and what he taught me stuck with me for life. He told me that if you want to build wealth in real estate, you always want to be buying, not recklessly and not without doing the math, but consistently. Think about your portfolio, he said, the way a smart investor thinks about a stock cost averaging strategy.

The idea is simple, but the discipline is everything. You buy a property when you can afford it, put tenants in place so they’re paying down the mortgage, and make sure the numbers work. Maybe you buy in a market that’s running high, and that’s fine, because when the market drops 10%, 15%, or 20%, and you’re in a position to buy again, you pick up a second property at that lower price. You confirm the cash flows. If the market keeps sliding and you have the ability, you buy another. Each purchase stands on its own merit.

You cannot time the top, and you cannot time the bottom. Nobody can, at least not consistently. But if you keep buying through the cycles, you cost average your way to a number that’s reasonable. One property bought high while it was cash flowing; another bought low while it cash flows too. When you combine them, your cost lands somewhere in the middle. Stretch that across multiple properties and multiple cycles, and your portfolio reflects the market’s long-term average, not the peak or the trough.

The wealthiest investors I know refuse to wait for a perfect moment. They don’t sit on the sidelines betting the market will crash so they can swoop in at rock bottom, and they don’t freeze at the top, convinced they’ve missed their window. They buy and hold. They make sure they have the money, the ability, and a property that works in the moment they purchase it, and they keep buying through the ups and the downs. It isn’t glamorous or exciting, but over the long run, that discipline is how real wealth gets built.

My advice holds in this market, or any market. You can buy right now, and you can buy in any market, as long as the fundamental numbers work. The money coming in has to be more than the money going out. Do that, and you’ll always be a buyer, no matter where the market sits, because what matters isn’t the high or the low. It’s whether the deal works on the day you close it.

If you’re thinking about investing and want to run the numbers on a specific property, or just talk through your strategy, I’d love to help. Call or text me at (978) 746-0124, email me at chris@dohertyproperties.com, or visit chrisdoherty.com. Happy investing, and reach out anytime you’d like to think it through together.