| Here's a proven real estate strategy: Buy a property, | | | | Sometimes an office that had once been a home is |
| change the use, and sell it for a profit. Big profits are | | | | converted back into a home, because the property is |
| possible if you find its most profitable use. The | | | | worth more as a home. Homes sometimes become |
| disadvantages of this strategy? There is a lot of | | | | professional offices for attorneys and doctors. The |
| homework required, and many possible dealings with | | | | more common examples of a change of use is when |
| zoning authorities and others. | | | | farmland is developed for homes, or when apartment |
| Years ago there was a row of old homes on a main | | | | buildings are made into condominiums. Many of these |
| street in the Northern Michigan town where I used to | | | | ideas will be covered as their own topics. |
| live. Many of them were rentals. None of them were | | | | The bottom line is that if there is a higher use for a |
| very well taken care of. Then one day they were | | | | property, there may be a profit opportunity. How |
| gone. | | | | can you tell? First you have to identify the highest |
| What had happened? That part of the street had | | | | use, meaning the use that makes the property most |
| been zoned commercial for many years, but there | | | | valuable. One way to do this is to simply look around |
| wasn't a reason to tear down perfectly good homes | | | | and see what is happening with other properties |
| to put up stores. That is, there wasn't a reason until | | | | around the one you are looking at. |
| the land could be sold for commercial purposes at a | | | | Once you determine what the property should or |
| price that exceeded the value of the homes plus the | | | | could be used for, you have to determine how much |
| cost of removing them. | | | | it will sell for when it is ready. Then you determine |
| As the town grew, at some point an investor | | | | how much it will cost to get it ready, plus the holding |
| realized that he could buy those rental homes, tear | | | | costs until it sells, and the costs associated with |
| them down, and sell the land for a nice profit. This is | | | | buying it and selling it. Subtract all of these costs |
| not uncommon. A particular piece of real estate is | | | | from the projected sale's price. |
| not always used for its "highest purpose." When this | | | | Then subtract the profit you want for your work |
| is the case, it may sell for much less money than it | | | | from that figure. This gives you the maximum price |
| otherwise should. It is just waiting for someone to | | | | you can pay to make the deal work. Offer less, of |
| recognize what its highest purpose is, and then buy it | | | | course. That helps with this and any other real estate |
| and convert it. | | | | investing strategy. |