Buy Only Properties that Have Big Profit Potential

Achieving big profits is something that is desired by every property investor. However, not every property that is for sale has true potential of delivering double-digit returns over the investor’s holding period. Many properties that are up for sale are touted by their sellers and promoters as great investment opportunities, but only some selected ones have very high chances to actually deliver really high returns.

First of all, unless the investor is buying property in a highly risky country/market where prevailing prices allow above 10% initial yields, double-digit returns can not be accomplished if significant value gains are not attained after the property is acquired. The secret then to achieving big profits through real estate investing is to spot properties, which have very high chances of registering strong value increases after they are acquired. Within this context, it is extremely important for investors to know what kind of clues can help them identify properties with such potential.

Based on empirical evidence describing the behavior of real estate markets and property values over the past decades in free economies, we can argue with a high degree of certainty that properties that are found under a particular set of economic/market synergies and circumstances have very high chances to register strong income and value gains in the short to medium term. On the other hand, we can also argue with a high degree of certainty that properties that are found under another set of economic/market synergies and circumstances have very small chances to register any value gains over the short to medium term.

In addition, based on empirical evidence regarding the spatial dynamics of real estate demand, property rents and values within contemporary cities and urban areas, we can argue that, under a specific set of circumstances, there are specific locations within a metropolitan area that have significantly greater chances than other locations in the same urban area to register strong property value gains in the short to medium term.

Investors who are serious about sharpening their ability of sorting out among the many opportunities that come to their attention only the ones that have the highest chances of delivering big profits, need to understand the general categories and subcategories of properties with big profit potential as defined by a set of market/economic synergies and circumstances, as well as a set of locational parameters.

Dr. Petros Sivitanides, the author of Real Estate Investing for Double-Digit Returns, has a Ph.D. from M.I.T. and over 17 years of experience in real estate investment consulting, research and forecasting. More on property investing for double-digit returns can be found here.

Article Source: ArticleSpan