Acquisition Strategy 2

Real estate is a local business. Prices can vary from one neighborhood to another, from one street to another and from one end of a street to the other. You deal in a small, specialized investment area because you must become sensitive to these differences. These differences can spell profit for you.

What are the value-added features of the property? How much does a garage, a basement, a second bathroom, or a backyard deck add to a house’s value? Is off-street parking or walking to public transportation important? Is proximity to shopping, a highway or a park desirable to prospective buyers? If so, put a dollar value on the amenity.

In some areas, each of these variables can be significant. In other areas, they may not significantly affect value. You must know these variables, and be able to put a price on them. An extra 1,000 square feet in lot size in the middle of a rural area may not be significant while 1,000 square feet in the middle of city may be worth millions. In major population centers, even the air over a building, called air rights, can be worth millions.

You may find in your area that a garage is worth an extra $10,000, a half bath $5,000, or having a Main Street address $25,000. What about the zoning? What about the lot size? What about the assessment? What about a finished basement? Are there properties with scenic views? What are the variables and what are they worth? This is the research that you are doing. The more you can isolate and identify specific factors affecting property values in your specific area, the more money you’ll make.

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