One generally accepted investing adage is that you "make money on the buy". Meaning, what you pay for an asset will largely determine your fate. Price matters a lot. Some/many would even argue that it's the single most important thing when it comes to investing.

Said differently, if you had to choose between paying above market for a high-quality real estate asset or paying below market for a low-quality real estate asset, you would choose the latter, because you have a higher probability of doing well.

In some ways, I agree with this. If you're buying an asset below what it's actually worth, then in theory you could turn around and sell it tomorrow for the market price. So you are quite literally "making money on the buy."

On the other hand, if you've paid above market for even a high-quality asset, you've now just lost money (at least in the immediate term). Because if you also turned around and sold it tomorrow, you'd lose money.

But is this always the right way to think about investing? One of Warren Buffett's many famous lines is that he'd rather buy a wonderful company at a fair price, than a fair company at a wonderful price.

And this would suggest that "cheap" isn't the only metric to consider. Especially if you think like Buffett does and you want to hold assets forever and benefit from the compound growth that comes along with wonderful assets.

So as obvious as it may seem, a better way to think about "making money on the buy" might be that you need to consider both price and the quality of the asset. Cheap could be a feature, or it could not be. But cheap and wonderful are generally always a good thing.