Potential Short Term Real Estate Investments

Real estate investments generally fall into three categories; short-term, mid-term and long-term. The short term investments are commonly from 1 to 24 months. The mid-term investments are often from 24 to 60 months. The long-term investments are typically five years and longer. Many real estate promoters are geared to the short-term opportunities. These deals will produce cash flow and profits for real estate entrepreneurs who are looking for short term (0 to 24 months) revenues. In these cases you are for the most part limited to looking for the following five opportunities.

1. Fix and Flip: this is the process of purchasing a property at below market, doing reasonable improvements and reselling it at a higher price.

2. Finish and Flip: this is the process of purchasing a property that is not entirely built out to achieve its highest and best use. This could be a commercial building that could be divided into more easily rentable smaller spaces, a home with an unfinished basement, a small apartment complex that would allow for increase rents if car ports were built, etc. The idea of course is to increase the value and resell.

3. Change of Use: this would include buying ag. Land and subdividing it into residential building lots, buying residential property on the edge of commercial zoning and converting the zoning accordingly, converting apartments into condominiums, etc.

4. Purchase or Lease Options: this is often a paper transaction where you find a great deal, buy an option then find an end user who will pay a premium of your contract price. You of course keep the spread.

5. Master Leases: this opportunity is for those willing to lease a large amount of space and then sub-let the space to smaller users at a higher per-square-foot rate, once again capitalizing on the spread.

Any of these opportunities can provide an investor with immediate cash flow, equity buildup for refinance or resale profits, or outright creation of value through sub-development, conversion or rezoning. It all sounds easier than it is. You need to make sure that you understand the market and its vagaries. You need to be willing to take the risk associated with the deal in the event that it does not work, and you need to be willing to meet the financial obligation associated with each opportunity. Yes people make money with these concepts every day. Are they right for you? Are they available in your market? I don’t know. You’ll have to do your own homework to find out. Be sure to take into consideration the lag times of market absorption, lease-up, governmental waiting periods, and closing time frames. If you do the research and make educated decisions, you’ll do fine. If you take foolish risks, you won’t. Get the education and support you need and everything should work out fine. Good luck. We’d be glad to help if we can.