If you are not someone who wants to invest in commercial properties you may wonder whether purchasing a residence can be a viable development opportunity. The fact is that it is often quite simple to purchase a residential property and sell it at a profit. The key is to find the right home to purchase. Here is what you need to know in order to evaluate a residential property accurately in terms of its development potential.

Who do you want to sell a developed property to?

Deciding what your target market will be is an important first step. Do you want to develop and market properties to regular home owners or are you looking for ways to attract trendy buyers who may be looking for cutting-edge or very trendy residences? This is an important consideration as you will likely look at different properties for each of these groups. Where you buy and the kind of structure that you buy will vary depending on your target audience.

If, for example, you are hoping to tap into standard home buyers you will want to look in established neighborhoods that are full of residential homes. Choosing the worst property in the best neighborhood can be helpful in this case. You can improve the home but not what is located around it.

If, on the other hand, you are looking to interest trendy home buyers who want modern and cutting edge homes you may need to look outside of established neighborhoods. Up and coming neighborhoods may have buildings that can be purchased and repurposed. A good example of this would be repurposing former commercial structures and turning them into lofts, condos or apartments.

How can you add value?

Thinking about how you can add value is important. Remember, you want to be able to turn a profit when it is time to resell the property you have developed. In a residential area, you may need to think about adding livable space. Homes with attics or which are constructed in a way that can be added on to may allow you to add value most easily.

Renovating and updating can also be a good way to add value. You may want to weight the impact of your decisions, however. Would a home be more valuable with an extra bedroom or would an ensuite bath add the most to the price that you will get for that property. You need to look at trends in the neighborhood and view comparables to tell what kind of impact your proposed changes will have on the value of a home.

Taking the time to do your research and think carefully before purchasing a building can help you choose those that will give you the best return on your investment on property. In today’s real estate market there are no sure ways to guarantee a profit on any property that you purchase but by thinking out your purchase carefully you will have a better chance to avoid properties that may be too costly or too hard to resell in the future.