Why You Should Always Look To Make A Good Deal GREAT!

Posted on 20. Nov, 2011 by in General

Hey everyone

Hope you are enjoying your weekend.

Richard and I had fun yesterday looking at properties and seeing what’s around in the buzzing Halifax market. We spent the day looking at five single family properties, all of which we calculated to have a moderate cash flow in our initial analysis. As always, our first question even before we got to walk inside any of the properties was  “how can we maximize this potential income?”. This comes from experience but it really it a good habit to get into from the start of your real estate investing career. 

Always look for ways to make a good deal great.  You can do this by making sure that the property is performing at its highest and best use.”   Experienced real estate investors look at how every property can be maximized to its full potential.  Factors such as the location, the attractiveness and attributes of the property as well as what it’s currently being used for are all taken into consideration.  Once these facts have been established, ask yourself if it is possible to change the property’s use to optimize profit.  Note – this is not the same as renovating an existing property.

We’ve spent the rest of the time checking out local zoning and tenant regulations with our local council to see if changes could be made.  It turns out that one of the properties has the potential to be converted into a multi family unit.  This is much better news.  Making these changes will dramatically affect the value of the property and generate an increased positive cash flow.  There’s still a detailed due diligence to complete but at least one of the properties is looking so much more appealing.

For a property to perform at its highest and best use, it’s vitally important that you fully understand  zoning, local rules, policies and tenant issues.   Don’t assume you can change zoning (we applied and failed in the past) -most of the time it’s just not possible.  You can’t leave any stone unturned in your due diligence.  Know everything about your potential property otherwise you could be leaving yourself open to disaster.

Think about what is possible in your market.  There are opportunities waiting to be discovered if you just look for properties that are not being maximized and then change their use.

Make decisions that provide a significant economic return and put extra money in your pocket!

Have a productive week!

Jane

 

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