"Upside Down" is when you owe more than the property is worth and it feels like you are just being hung out by your heels. Lots of Residential owners in Kochi Real Estate understand the pain of being Upside Down at the moment.
What we are all looking for in Commercial Property is "UpSide". "Upside" is a term for any extra profit boost you can find in your next Commercial Property. Any little thing you can do that gives you and your investors a little additional profit kicker along the way. Another term for this extra profit is "Value Add". You add value and then reap the extra rewards. Upside comes from one simple source, Problems You Can Fix. That's right, you are looking for properties with problems, just make sure they are ones you can successfully address.
If you find a property with a Vacancy Rate of 15% in a market where the average is 5%. You may just have some Upside available to you there. It all depends on whether you can actually move the Vacancy Rate down to the Market Rate once you are the owner. And I assure you ,when you do, there will be a major return boost for your efforts.
Upside is a Three Step Process It isn't that hard to find problems in an ugly old Strip Mall or Apartment Complex with a bad reputation and a very motivated seller. Finding the problem is step one. This is the easy part.
• Find the Problem
• Fix the Problem The 64 thousand dollar question is how can you fix it? And it may be worth a LOT more than $65K to you.
• Harvest the Upside Remember the multiplier effect of the Capitalization Rate on any extra income you can retain at the property. The math is pretty simple.
Become an UpSide Hunter The search for "Value Add" properties with "Upside" is what drives certain Commercial Property Investors to ferret out the tarnished, tainted or downright tawdry properties and become rehabilitation or repositioning experts. When you turn around properties with significant challenges you can see annual returns of 30% and much more for your efforts.