Investment Real Estate

Being clever is a huge advantage in business

Being clever is not an evil action. It is simply being creative. The interesting aspect to this is; real estate and creativity are often not considered to go together. For some reason, most business owners and investors think real estate is cast in stone, and not subject to clever, creative solutions.

Here are a few ways you can use these skills to look for, solve and profit from issues which others are prone to miss.

Look for and Solve Functional Issues:

Often-times, as you walk through a subject property, you can find “issues” which cause some form of inconvenience or distraction for an occupant. Some may be too large or costly to correct. However, there are numerous times you will notice issues which might be corrected in an affordable way. Do not mention the solution to the seller or their agent. Instead, point out those problems as you negotiate for a more-favorable purchase price. Then, while completing your updates after acquiring the property, you can make those improvements, thereby adding unseen value.

Here are a couple of Functional Issues to watch for, and suggested solutions:

Functional Issue: Interior swinging door uses valuable floor space because furniture cannot be placed where the door will swing.

Creative Solution: Replace the swinging door with a pocket door. A pocket door takes up zero floorspace and therefore frees up the area previously used by the swing of the original door. https://www.pinterest.com/explore/pocket-doors/

 

Functional Issue: obsolete utilities, pipes, chimneys, etc. interfering with floor or head space.  For example, the chimney used for venting older less-efficient furnaces may run up through a room or an otherwise unneeded wall, thereby consuming valuable floorspace.

Creative Solution: Consider changing out the old furnace for a modern, more energy-efficient “side-wall vented” system. Then remove the now unneeded chimney. Voilà! You now have much-needed space that previous owners did not envision.

(this will also give you bragging rights as offering a “New and High-efficiency heating system”, and may even qualify for utility company rebates.)

 

Look for future Trends, before the general Public would notice them:

This technique is particularly important and useful if considering Urban Restoration efforts…in other words, considering properties in run-down parts of town, but where there is a movement towards Urban Renewal. You don’t want to be too far out in front of such a movement to where it will slow down your ability to market the renovated property at a significantly-higher rent or sale price, but you must beat the rush in order to secure the property/ies at the distressed price.

 

This technique can also be valuable if you are able to get out in front of a coming infrastructure improvement/installation. For example, way back “In The Day” when the national freeway system was in-planning, there were investors who would find out where a stretch of freeway would have on and off-ramps. They would then go out and buy what would become those desirable lots.

This can be done by monitoring current government planning meetings (Federal, State and local agencies). They will be early in any proposed planning by other governmental agencies, and by major developers. Developers for example, must secure approval, so they typically make Purchase Contracts contingent upon securing such zoning approval.

NOTE: This technique is not for the Faint-of-Heart, nor someone with shallow pockets. Use wisely, and please be sure to seek professional assistance.

 

Try your hand at Options:

An option is basically paying a negotiated amount for the option to the current owner for agreed-upon purchase terms, allowing the option buyer a set amount of time to either consummate the deal, or walk away. Options are used for many purposes, but in the context of our subject, an option could be used to tie-up a property where the option buyer sees future value. The option buyer could then go out and negotiate with prospective developers to either buy the property at a higher price, or to buy the option from the investor at a premium.

This can be a method to allow a small investor to capitalize on a potentially very large property with only risking the cost of the option.

A required fundamental talent with options is to have a good Crystal Ball to see into the future. Some Risk-taking nerves are also handy. 

 

Consider utilizing a “Sale-Leaseback” for your own company’s property:

For many businesses, probably most, having more funds to place into their actual business operations, or to spread the risk of the business by investing those funds into another “Basket” can offer large opportunities.  Unless your core business is real estate, you very-well may benefit by utilizing a Sale-Leaseback. We discuss in more detail what a Sale-leaseback is, and how it works on the Sale-Leaseback page.

Interested in Investment Real Estate?

Contact us to explore various, creative ways to utilize investment properties in your financial plans.