Do you remember learning about the Law of Supply and Demand? Perhaps you slept through that part of the lecture, or didn’t see it’s value at the time. Big mistake. Following this principle is what separates the struggling investor from the successful one.
If you want to make a good investment, one way is to look for something low in supply, but high in demand. An example of this is the Southern California housing market. Lots of people want to live in Southern California, and housing is limited – which drives the prices up quickly. Buying and holding on to the property will increase its value.
Another good investment is to buy something that is in high supply, but low demand. Often there is a surplus of a certain kind of property, so it can be purchased at a discounted rate. You won’t make money on this kind of market unless you do something that makes your property worth more, so you can sell it at a profit.
For the price to increase, either the demand has to increase or the supply has to decrease. Since you have little control over the supply side, you have to do something to increase the demand. The best way to do this is to make the house more desirable.
Buy a run down home at a low price, make repairs and improvements, and you have increased the demand value of the home. The result is a dramatic increase in the selling price of the home. This is one way shrewd investors can make a profit in the real estate market using the Law of Supply and Demand.
Tags: Real Estate