“The Path of Development” Way of Real Estate Investing
A music teacher taught students from her quaint home located on the main east/west thoroughfare of a small city. The road started out as a 2 lane, then four and finally five lanes of heavy traffic including transfer trucks and other large vehicles.
The road widening ruined her pleasure in her small property, but eventually paid off for her and her family when some large company bought her lot, located on a corner with a traffic light, for a tidy sum.
It was an accidental investment beyond the value of most residential properties. It’s also the way a lot of people find themselves getting more prosperous.
While it was true her home no longer had as much value as a residential property, it gained a LOT of value as a commercial property and ended up being a financial windfall for her and her children.
Donald Trump has made money recognizing this type of unperceived value in property. He is a developer who will take advantage of anyone who is ignorant of the value of their own property. He can see what many owners do not.
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Plus he can create value that does not yet exist in whatever he decides to do with a piece of real estate. It’s his second way of creating income and value in a property that does not yet fulfill it’s potential.
Having rentals in the path of development is a good stance for an investor. Cities expand creating opportunities for residential developers as new neighborhoods get built.
Small businesses like dry cleaners, pawn brokers, night clubs, car dealers and child care happen. They all want the best location for their businesses, essentially wherever the action and the traffic is.
Fast food places look for traffic lights for their locations, knowing easy access may mean the difference between success and failure for one of their franchises.
The development and the road start the process. Then the residential properties sell, maybe for deflated prices. Many residential homes turn into businesses or rentals with a stream of income. The land itself may end up being worth more than the original property because of the location. The municipality will chip away from the land to create roads and sewers and pay the owner for emanate domain improvements they deem necessary.
What seemed bad to start with now seems pretty good, especially for investors. An investor may never wish to go to the trouble to improve the property but instead will sell it to some other investor who wants the job as the music teacher did. Another home in a quiet subdivision was her home for the rest of her life, but she continued to teach music.
For those of us who are not rich folks living in the Big Apple our successes might be smaller, but quite lucrative if we follow the music teacher’s path.