A good way to make money in real estate is to buy up distressed, foreclosed, or otherwise affordable properties for development. This means that you will put money into the property after you purchase it, either to rent it out yourself or to sell it to someone else. You need to be careful when choosing these types of properties for sale, as they may need added work to get them into a good condition and added expenses you wouldn't face with other such properties. Note a few reminders to consider so you always get good properties for your development interests.
Consider energy efficiency and modernization
When you buy a property in distress or that needs work before it can be resold or rented, you need to consider more than just its overall appearance. Renters and buyers will probably want an energy efficient property so they save money on utility costs; this can mean new wiring to support LED lights, plumbing for low-flow toilets, motion detectors, upgraded insulation, and other such features. Modernization would refer to the wiring and cables necessary to support the internet speeds that many businesses need.
In some cases, it may be more cost-effective to tear down a building or tear it up right to the frame and rebuild it almost from scratch. The land might be valuable enough, and with the foundation already poured, this can be a good choice—just be sure you understand that many properties will need more than simple cosmetic work in order to make them desirable to other buyers and tenants.
Consider surrounding development
A building may be for sale because another business left; be sure you note why that might be, as surrounding development could be a factor. For example, was a freeway off-ramp constructed just past this building, so that potential customers and clients are now passing it by? Is there a competitive production facility or similar retail establishment just down the road? A nearby freeway can mean easier access to a building but it might also mean distracting noise and congestion for an office complex or medical facility.
When considering a property for development, remember that potential buyers and tenants will look at more than the building itself. In some cases, you might be able to offer a lower purchase or rental price to compensate for these drawbacks, but it's good to work with a real estate agent who can give you actual figures as to how surrounding development may affect its overall value. Contact a company like Carter Real Estate for more information.