If you are a real estate investor, it is important to understand the concept of a path of growth property. This type of investment offers potential for long-term growth, and it can be a great way to secure your financial future. In this blog post, we will discuss what a path of growth property is and why it is so important in the world of real estate investing!
What Is The Path Of Growth In Real Estate?
In real estate, the path of growth is the trajectory of a particular property or market.
This path is determined by the rate at which prices are increasing, and it can be used to identify potential investments.
Properties on the path of growth will experience an increase in value over time, making them very attractive to buyers who understand the market.
Do You Always Want To Buy In The Path of Growth?
As you may have guessed, the appeal of a path of growth property is seeing a better return on your investment.
Properties that are considered in the path of growth are generally situated just outside of a rapidly growing urban area.
Cities tend to grow in a fairly predictable pattern. Initially, a city will spring up around a particular resource – a natural resource such as oil or gold, a particular industry like we see in San Francisco’s Silicon Valley, or on critical trade routes, such as the Port of Los Angeles.
People start migrating towards the city looking for work or investment opportunities and population numbers rapidly grow. Secondary industries quickly develop in response to the growing demand for consumer goods and services.
As the city matures, the population numbers climb and competition for housing and services increases exponentially. As a result, people start moving further away from the city center to live in suburban neighborhoods in the surrounding areas.
If the central business district continues to thrive, these suburbs will continue to grow, spreading into formally undeveloped tracts of land.
Your job as a land investor is to predict the path that this growth will take and purchase the land while its market value is still low before anybody else does.
Pros
- You have the potential to make large profit margins
- It’s easy to market the land to the right buyers
- You have the option of making improvements to the land, such as having it surveyed, which can increase its market value even further
Cons
- You need to do your research and be confident that growth is the most likely outcome
- Land prices in paths of growth tend to be higher than other types of parcels and you will have to structure your deals accordingly, using the double close method or seek out transactional funding
- You might want to hold on to the land for a period of time to allow demand to drive up prices.
Identifying Your Path Of Growth Properties
If you decide to set your sights on properties in a path of growth, you need to start researching patterns of growth in counties across the USA.
There are several factors that you need to consider, including:
- Changes in employment patterns
- Emerging industries that are location based
- More recent semigration patterns spurred on by the boom in work-from-home employment opportunities
Unlike traditional real estate, the raw land is a feast over famine market, meaning there's always enough to go around.
Wrap Up
If you are looking to build a real estate investing business, land flipping offers a wide range of opportunities to maximize your profits while minimizing the complications of traditional real estate.
However, not all land parcels are equal, and choosing the right property and getting it at the right price is essential to your success.
Focusing on land that is in the path of growth is a solid strategy that is highly likely to produce high ROIs.
If you would like to learn how to identify paths of growth and find the perfect land investing deal, contact the Land Profit Generator to book a FREE 20-minute consultation.
