Make Money Buying and Selling Property

By Steve Gillman - 2007

The obvious goal in buying and selling property as an investment id to sell for more than you buy for. But there are a number of ways to accomplish this. We'll look at six of them below.

Buy and Hold

Real estate has been a particularly bad investment for this strategy lately, since holding has meant watching the value go down. But that may change soon, and some areas are already seeing price appreciation. Looking for where the growth is in a community and buying in the path of that growth is one way to better the odds of decent appreciation. Keep in mind though, that this works best if you have cash to invest. If not, the property has to go up in value fast enough to cover your interest cost and any other expenses (like taxes) just to break even someday.

Buy and Add Value

Sometimes there will be relatively simple ways to add value to a property to increase the price you can get. You might buy a lot which has difficult access, for example, and put in a driveway or access road. Or you might clean up a piece of land that has junk and/or piles of dirt on it. The following three suggestions cover ways to add value.

Buy and Change Use

If you can get a property rezoned you might increase the value in a matter weeks. For example, buying and selling property that is zoned for rental homes, but getting it rezoned for commercial use, can be a method of getting a (relatively) quick profit. Normally this will only be possible with properties which are at the edges of areas already zoned the way you want your to be zoned. To use this strategy more safely, you might get an option on the real estate and get the zoning change before you are actually committed to buy.

Buy for Cash and Sell on Terms

An easy way to add value to any real estate is to make it easier for a buyer to buy it. This can be done by offering a low down payment and carrying the financing yourself. It is safest to do this with raw land, because there is little that the buyer is likely to have damaged if you are forced to foreclose and resell the property. I have sold property for as much as 30% more than I paid (and in just weeks in one case) by buying for cash and then offering easy payments.

Buy and Raise Income

Whether it is leased farmland, and apartment building or a strip mall, income property is valued according to income. That means if you increase the income it produces, you have probably just increased the value. On the buying end, look for properties that are rented at below-market rates. While you have it, raise rents to a market level, and look for any other ways to generate more income. This could mean adding rented storage units to an apartment complex, leasing more of a piece of land for crops or Christmas trees, or lowering the expenses in order to raise the net income.

Buy Cheap and Sell High

This is perhaps the obvious dream of every investor, and it is entirely possible to find distress sales and other opportunities for buying and selling property based on this most basic of strategies. But since transaction costs can easily run 10% of your investment for buying and selling, you need to get a really good deal if it is your only strategy. For best results, then, combine this with one or more of the other suggestions above. For example, if you can buy a vacant lot cheap and for cash, change the zoning to make it worth more, and sell it with easy terms, you could make a great return on your investment.

Another page you might want to read:

How to Sell a House

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