Just have a look at the success stories of the fortune spinners in the last fifty years. At the middle levels, most of the rages to rich stories are coming from two sectors of the economy, during the last two decades it is coming from the side of IT sector or app developers and prior to that, it was the real estate players of the world that was “ruling the roost.” Many people believe that real estate fortunes are a wait and watch game and app culture is dependent on a business idea. The fact is this that real estate business is also dependent on right kind of ideas.
Understand a macro business model and convert it into a micro business model
The macro business model suggests that most of the fortune spinners in the market of real estate made their money based on two mantras. Instead of searching for hot and happening places they searched for some places, they can develop an infrastructure. In the second run, they developed the land and sold all the non-prime plots and establishment in the beginning at the rates of peanuts. Finally, a phase came when they received double or sometimes the triple premiums on the major plots in the land. This macro model is applicable on micro investments as well.
Check out some properties on the outskirts of well-developed properties
Instead of investing in a big plot, invest in three plots; purchase the smallest plot in the most happening area of the property. Purchase a slightly bigger plot in the mid prime area of the vicinity and purchase a big plot on the outskirts of the vicinity. We cannot deny the factor of the natural growth behind the ever-increasing price of the real estate. Wait for your prime property to reach on to its top. Sell it at a high price; utilize the additional money in getting rid of the debts on the mid prime property. This investment in the mid prime property will also help you in avoiding the capital gain tax as well. Now wait for the mid prime property to reach to its top price, now once again you repeat the same cycle. The first prime property helped you in consolidating the debt of the second property. Many small real estate investors are following this same formula. However, we would like to add one thing very specifically; you should have an eye for a good property.
This type of debt consolidation is a double benefit, first, you are getting paid the loans on two properties without even touching your savings and second, you are maintaining your capital gain cycle as well.