In my own efforts to find fixer properties that fit my investment criteria, I’m constantly looking for specific problems or conditions. I want to acquire properties that I can transform into positive money-makers. This transformation can be the property’s physical appearance or it can be a restructuring of its financial condition. Also quite common for me is changing (removing) the people who occupy the property. More often than not I’m doing all three types of transformations at the same time.
You don’t get big paydays simply because you own real estate. You earn big paydays from doing something that increases the value of real estate. A value increase doesn’t necessarily have to be a big change in the present market value. Even if a property doesn’t go up a nickel in market value but is made to produce more net income from rents, you’ve created some additional value.
I’m always concerned with location. I want good location for a specific plan I have in mind. However, all my plans are not the same. They all have the same objective – to make profit – but the way I do it can vary with different properties.
I like to think about locations as “A” “B” and “C”. “A” locations are the best. “B” will be the local average and “C” is a stone’s throw from the county dump. With some study and driving around, you can easily determine these locations in your own investment area. Investing in “A” locations is fine, but it generally takes more cash. My choice is “B” locations, but I always look at a “C” to make sure I don’t miss anything exciting. I stay away from HUD projects, high crime areas and places where I don’t feel safe being there.