omes with extra lots may for it and sell it. Why is this
present a real estate significant? Because the value of
investing opportunity. They the home on one lot plus the
may provide a way to reduce the value of the other lot sold
cost of a rental home you want to separately is often much higher
buy, or just a way to make a in total than the house will
profit buying and selling. Of originally cost with both lots.
course, this can be tricky if you
don't know the rules. I first heard about this idea
from a real estate agent who had
Typically when a city was done this in a small town in
platted, the residents proceeded Northern Michigan. He had noticed
to build a home on each lot. Of that many homes in one area had
course, some built on two lots. two lots, but the houses were
This is why even in regularly sitting squarely on just one of
spaced homes there will often be them. The lots in that area could
house or two that has a larger be sold for $45,000, yet the
yard than the rest. If these homes with the extra lots only
homes, along with their garages sold for about $20,000 more.
and other out-buildings sit People will only pay just so much
properly on one of the two lots - extra for what appears to be just
meaning they are set far enough a large yard.
from the lot line to comply with
city regulations - the extra lot The obvious plan for an investor
can be sold. was to buy the home, sell the lot
and then sell the home -which is
Usually, even if the property has what he did. Of course a big
been combined into one tax chunk of that potential $25,000
parcel, you can split off the profit was eaten up by the
other lot, get a new tax number transaction and holding costs.
Ideally, then, you want to lowered your cost for that rental
combine this strategy with a low home by $20,000 when compared to
offer so you get the home for a other homes. Refinance, and that
little under market as well. could be enough to turn a
negative cash flow rental into a
There is another way to use this positive one.
strategy. If you were looking for
a rental home as an investment, Apart from being a real estate
and homes with extra lots are investing opportunity, you could
similarly under-valued in your do this when you buy your own
area, take a look! You might pay home as well. If you really don't
$20,000 more, but if you sell the want to mow a large lawn, buy a
lot for $45,000 and have just home with an extra lot and sell
$5,000 in costs associated with that lot. If you can get the
doing that, you net $20,000. seller to agree to selling it as
two pieces of property, you could
This might be tough if you pay cash for the lot, and so be
financed the deal, but the bank free to sell it without getting
may allow you to sell the lot if approval from your lender.
the proceeds are applied to the
mortgage loan. In that case, you
About the Author:
Copyright Steve Gillman. This article was an excerpt from 69 Ways To Make Money In Real Estate. Want to know the other 68 ways? Visit http://www.99reports.com/make-money-in-real-estate.html
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