Yes, its true. You profit when you buy not when you sell. If you are thinking about your earnings only when you put your offer on the table, its very late in the day and you are playing with losses. Creative Real Estate investing is about making money. If you want to buy Real Estate for your own personal use and not as an investment vehicle, then creative Real Estate techniques are inappropriate. Creative techniques have as much to do with creating "soft" and "hard" value as much as they are about taking legal control of your properties. The first step, finding a bargain, finding a property priced with excess intrinsic value is only half of the equation. An assesment of "hard and soft" value adding should be calculated before you buy and not after the deal is done. "Hard value adding" is simply the garden variety paint job or cosmetic improvements to the Real Estate in question. "Soft renovations" are just as effective but without the hard work. Examples of "soft re-habs" includes paper improvements to the asset. For example something as simple as identifying that the exisiting owner has let the exisiting renters live in his house for a very long time and the actual market value of the rents is double what is being currently taken. So, in this example a rent rise is simple to implement however to a savvy investor (who you plan to sell this property to) this increase in rent represents value. First they can get a bigger loan because the rents are higher, therefore paying a bigger slice of their debt each week. This of course means you can ask more for the property. A rent rise immediately looks better on the balance sheet which is what a majority of investors look at ignoring all else. This is one simple example of a soft re-hab. Your creative application raises the value of the property without lifting a paint brush or hammer. Another simple example would be to divide the back yard if it meets the size requirements. Its a few simple forms and a fee paid and the sub-division is complete. Sell the house, keep the land. Another may be a rezoning. For example, if the property is established and surrounded by doctors and dental surgery's but is still zoned as residential, a simple application for re-zoning and if the request makes sense to the local authorities, your property has just become more valuable to anyone from day care centre operators, to doctors, dentists, pathology labs, and a host of other businesses that may be located in the area. Most people think about paint colors and window dressings when they think about getting creative with real estate. However, the real creativity is to asses what you have and whats possible in terms of derivative values and not hard re-habs. Thats where the juice is! To you health and rapid success, |
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