How Can I Find Good Real Estate Investments
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How Can I Find Good Real Estate Investments

How to find good real estate investments by Larry Matthews.Investing in real estate for profit can be rewarding for those with foresight and patience.

How can I find good real estate investments? I get asked that question a lot. There are many ways to invest for profit in real estate. More ways than I can cover in one article but I will focus on a few that have worked for me. One of the best ways (If you have the patience and time) is to locate real estate that is just out side a growth pattern. As communities grow that growth gradually encompasses the surrounding land for residential and commercial development. Although no crystal ball can tell you exactly when that growth will hit your location if you invest wisely it will eventually and you can cash out and profit. I will give you two examples                 

1. One day my wife and I were driving through a small town near our home. I noticed a small home on a corner with a private for sale sign on the lawn. It was a fairly busy corner and I said to my wife. There will be a Tim Horton’s on that corner some day. I turned around and knocked on the door. I bought the house for $17,000. We rented it out for 7 years. I had almost paid for when I sold it to the local Tim Horton’s Franchise for $75,000. I had the foresight to see the future value of that corner.

2. In a growing community I purchased 20 acres of land near the 100 series highway for $65,000. Over 20 years development took place around the 20 acres. I was offered $600,000 and turned it down. Similar parcels have sold for over $1,000,000.

One way to investigate future growth patterns is by making a visit to your local Municipal planning office or Dept of Transportation. This will help you decide where to invest based on actual plans for future growth.

Another strategy is to find poorly managed and maintained rental properties in extremely good locations. Many property owners are poor managers. They do not increase the rents and as expenses rise can’t afford to maintain the building. They sell the building to solve the problem. Because of the low rents and deferred maintenance the building is sold at a reduced price. Having the foresight to see the potential you buy the building requesting vacant possession. If you are able to have the building vacant on closing you then renovate and re-rent the building at much higher rates which are obtainable because of the excellent location. Once the cash flow is improved the income approach to value (utilized by appraisers and lenders) indicates a much higher market value. Because the building is in an excellent location recent sales of comparable buildings also support a higher value. The higher income and renovations have added substantial equity to your property. You then have the option to sell and cash out or keep the building and have the tenants pay off your mortgage and add any net income to your over all profit.

Yours In Real Estate

Larry

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