3 Principles of Real Estate Investing

@albanga I am not saying that 'below market value' is accurate. I just can't think of a more accurate way to describe the concept.

I have another example to add to the mix. Fair market value represents a price where the seller and buyer agree, neither are operating under artificial constraints, the seller has reasonable knowledge of what they are selling and the buyer has reasonable knowledge of what they are buying. In this case I would assume the market value is the same as intrinsic value.

"The intrinsic value is the actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors. This value may or may not be the same as the current market value."
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I once bought a property that had been rezoned but the seller didn't know this. It was a 2 unit site that was rezoned to a 4 unit site. The rezoning increased the intrinsic value but the seller did not know this. Because of the sellers lack of knowledge he was not able to negotiate a fair market sale price equivalent to the intrinsic value of the asset. I wouldn't say that I bought the property below market value because no one forced him to sell and no one forced me to buy. However, the price I paid was below the intrinsic value of the asset. Perhaps 'below intrinsic value' is more accurate but I don't like that any better than 'below market value'

 

Can't quote Ben here but in my opinion I think many factors can contribute to investment grade.

High income to debt ratios, infrastructure, low unemployment, low vacancy rates, wage growth, transport hubs, urban renewal, gentrification, high owner occupied/investment ratio.

 

Yes mainly CIP
I have not always considered development not important
My earlier sites have development potential (some as large as 2.9ha) do have but it is just on paper it never seems worthwhile to do the development
My money has better return (and less risk) spending on another property ...especially since I am a non selling.
When you don't sell and you consistently buy say a $1m (all cf+) each year for 20+yrs you will be surprised how much your portfolio brings in (cf+) (and how unimportant CG is)
So I consider development less important now ...concentrate on lower risk , CF+ , greater future growth , low management.
My suggestion is consistently buy cf+ only year after year and don't spend too much time studying and analytical research ...just do something ...! ...and don't stop! .

 

This occurred for my two purchases in MBRC. Zoning changed on the first property 3 weeks after settlement ( although near-waterfront location and other developments nearby suggested zoning would change at some point ). For the second one in another suburb, local agents were not clued in to the zoning change that occurred 15 months earlier.