In general, we can distinguish four categories of properties with big profit potential (see Figure 3):
A) Properties with prospects for robust property-income and value increases, which can be classified in three sub-categories: A.1. Properties about to experience significant rental income and/or value increases due to strong economic growth of the metropolitan market within which they are located, or other favorable changes in broader macroeconomic forces. I will refer to this category as “properties with market-driven value-increase potential.”
Figure 3 – Categories of Properties with Big Profit Potential
A.2. Properties about to experience strong rental income and/or value increases due to significantimprovements in their locational advantages expected to occur as a result of significant developments in their surrounding area or the broader urban area within which they are located. I will refer to this category as “properties withdevelopment-drivenvalue-increase potential.”
A.3. Properties that, due to mismanagement, are currently earning an income well below their true potential, given the advantages of their immediate and broader location. I will refer to these properties as “mismanaged properties.”
B) Properties that can be bought considerably below market value, which are referred to hereafter as “bargain properties”.
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