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The Covered Land Play
This table of contents organizes and summarizes key information about the "Covered Land Play" real estate investment strategy based on the provided excerpts from Michael R. Linton's work and related website content.
I. Introduction to the Covered Land Play
Definition: This section defines the Covered Land Play as a real estate investment strategy that involves buying property with existing income generation (like rentals or commercial spaces) while simultaneously planning for a future, more profitable redevelopment. This dual approach allows investors to offset holding costs with current income while strategically planning for long-term capital appreciation.
Example: Development Land for Single-Family Homes: This section illustrates the Covered Land Play with an example of an investor purchasing a mobile home park. The investor benefits from the steady rental income while planning to redevelop the land into a higher-value residential community when market conditions are optimal.
II. Key Components of the Covered Land Play
Current Use Income: This section emphasizes the importance of acquiring a property that generates immediate income through rentals, leases, or other operations. This income stream is crucial to offsetting expenses like mortgage payments, taxes, and maintenance.
Future Development Potential: This section highlights the need to identify properties with strong potential for future development. This potential can stem from factors like zoning changes, urban expansion, or increasing demand for specific real estate types.
Value Appreciation: This section emphasizes that a core principle of the Covered Land Play is the anticipation of property value appreciation over time. This appreciation is driven by the development potential and leads to higher returns when the planned redevelopment occurs.
III. Frequently Asked Questions
Profitability: This section explains that the Covered Land Play is profitable because it allows investors to earn income from a property while waiting for the opportune time to redevelop it, maximizing returns from both current use and future development.
Suitable Property Types: This section identifies suitable properties as those with both existing income generation and strong redevelopment potential. Examples include aging commercial buildings, underutilized urban land, and rental properties in rapidly developing areas.
Holding Period: This section acknowledges that the holding period for a Covered Land Play property is variable and dependent on factors like market conditions and the specific property. Holding periods can range from 5-10 years or more.
Risks: This section cautions that while potentially lucrative, the Covered Land Play strategy carries inherent risks such as market downturns, regulatory changes, and the complexities of managing income-generating properties.
IV. Essential Implementation Strategies
Thorough Market Research: This section stresses the paramount importance of in-depth market research, focusing on identifying areas with robust growth potential, favorable zoning regulations, and strong demand for future development.
Current Use Viability Evaluation: This section recommends thoroughly assessing the viability of a property's current use to ensure it generates sufficient income to cover all holding costs. This involves analyzing rental markets, tenant stability, and existing lease agreements.
Future Development Planning: This section advises developing a clear and detailed vision for the property's redevelopment. This includes understanding zoning requirements, anticipating potential infrastructure needs, and accurately gauging market demand for the intended future use.
Wise Financing Management: This section highlights the importance of securing advantageous financing terms to minimize holding costs. Utilizing fixed-rate