A forced appreciation strategy is used by investors who want to take full control of their investment. As a result, investors can expect a huge return on their investment, but it takes a lot of patience and hard work. What is forced appreciation all about? It pertains to buying something that is not investment worthy and then does the necessary work to turn it into something profitable. Forced appreciation is common in commercial properties.
For forced appreciation to be effective, it needs foresight As a real estate investor, you should be sure of your actions, especially if you take the forced appreciation route. You cannot just blindly get into it without foresight. Value creation is important, and it can only be done once you foresee the value potential of the property. An intelligent real estate investor knows how to see the value of the building that other investors failed to see. The analysis is a crucial component of value creation. This website offers some good examples of forced appreciation.
Think of things you can add up to the property to make it appealing to the eyes of others. For an instance, if you have a rental property, you should increase its value so that you can increase the rent and at the same time entice a lot of people to rent out your property. It could be in the form of redesigning the building, doing major renovations or even strengthening the security of the property. These are just some of the things you can do for your property to appreciate its value.
Develop a plan of action Once you foresee the value of the building, the next step is to develop a plan of action. You should put your vision to work. Your plan should be realistic and attainable. Your plan is geared towards adding value to the property and generating more profit. If you have enough capital, then you can carry on with the implementation of the plan. On the other hand, if you don’t have enough budget, then another option is to sell your idea to potential stakeholders. Some real estate investors who have limited budget find someone who is willing to partner with them. You have to bring out your entrepreneurial spirit when it comes to convincing other investors to partner with you.
If you look at forced appreciation strategy, you might think that it is simple but in reality it is not. Just like any other investing strategies, it does come with a few risks, but you can get through it as long as you put your time, heart, and soul to it. A bit of hard work and an ounce of patience can help you transform an average property into a great one.
To know more about forced appreciation and other real estate investing strategies, you should follow Doug Clark. He is an American real estate investor and the host of the American reality TV show, Flip Men. He and co-host Baird buy properties at an auction, rehabilitate the houses, and sell them for profit. Doug Clark is tagged as the new face of real estate.