Investors buying properties at the price lower than the current market value or with immediate growth, then selling them for a profit.
Keys to make it work:
- Knowing where to find them
- Knowing how to bargain once found them
- Good knowledge of property prices and trends in the areas
- Understanding the seller incentive and vendor psychology
Depending on the exit strategies of each buy, short-term funding, options and delayed/long settlements are beneficial strategies for investors seeking to lower the investment risks.
Time frame and exit strategies:
The time frame to generate returns using this strategy ranges from a few weeks to a few months.
Investors often sell the property at a gain immediately, or apply other strategies onto the property to further increase value.
The return perspective:
With a lower purchase price, the potential gains are substantial.
Investors basically buy immediate equities.
The potential risks/difficulties:
There are always reasons why the property is cheaper than they should be. Sometimes, there are problems with the property; it could be tax effect, vacancy rates, house conditions etc; some of them are not easily resolved and can be very costly.
Finding these types of bargain properties consume time, requires special skills, knowledge, researching tools and the proper sourcing channel.