Real estate investors are always on the lookout for the most profitable opportunities, whether it be renting out properties or flipping houses for resale. While it is undeniable that these proven strategies offer great potential, it often pays off to think outside the box and look at properties from different standpoints. Here are four creative, long-term strategies for new and seasoned real estate investors, as outlined in a Forbes article.
- Buy a single-family home on a lot with multi-unit zoning
If you are considering buying a single-family home, take zoning into account. By purchasing a single-family home that sits on lot zoned for multi-family development, you can reap more benefits in the long run than meets the eye. For example, you could rent out the home for income until you have the wherewithal to raze the house and build a multi-unit property in its place. Alternatively, you could sell the home to another developer who might be interested in building a multi-unit property on the lot.
- Buy a multi-unit property near an area marked for development.
When plans for a new development such as a commercial district are afoot, a planning permit will be posted long before the building permit is issued. Keep your eyes out for these advance notices on your county’s website and search for multi-unit properties in the vicinity of the new development. Once the new development is near completion, you can expect your rental rates to rise significantly as the demand for the area increases – even if you don’t update the units.
- Buy parking lots during the economic downturn.
With the shift to remote work due to the pandemic, the value of parking lots in downtown areas have dropped. This is a good time to purchase a parking lot at a reduced price. As more people get vaccinated and the commute to downtown areas picks up steam, you can expect higher returns on investment (ROI) from such a deal. Not only do parking fees in high-density zones provide steady income, but the lot also has a high resale value for potential developers.
- Buy a single-family home near a university with zoning to build an ADU.
Pay close attention to the zoning regulations and consider purchasing a single-family home that allows the possibility of building an additional dwelling unit (ADU). This is especially appealing in properties near colleges and universities, as buyers may derive income from these secondary housing units. Many families buy an investment property with an ADU near their child’s college so the student can rent out the space and offset their expenses.
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