In real estate investing we are focused on one type of property and that is value-add.
Value-add is the practice of taking a property and increasing the market value of that property by:
increasing the income from it
changing the use of it.
Typically, you will increase the value by more than what you put into it, thus creating a profit for you.
This is opposite of buying a property that is at retail or turn-key.
Here are a few examples of value-add investments:
- A fix and flip investor can purchase a run-down house and complete a rehab to add value and realize a gain or profit from the sell.
- A real estate investor can buy a small house in a neighborhood with larger homes around it and add square footage to the property to bring it up the local market. Creating profits for the real estate investor.
- A land developer can take a large tract of land and subdivide it into smaller home sites. The smaller lot sales will be larger than just selling one large lot.
- A real estate investor may buy a 8-plex that is currently only at a fraction of the market rents and increase them. Creating more cash flow and a higher valuation of the property.
As you can see by these examples the world of value-add properties is where the profits are and where cash flow is created.
Get connected and accelerate your cash flow.
Please check out all our videos on our Youtube channel.
Join us on Facebook for daily content that can help you grow your business.
Looking for more information on real estate investing? The Bigger Pockets site covers every subject on all types of real estate investing.