Because of general stereotypes related to what constitutes real estate value perpetuated by advertising and media hype most of us are led to think that the wealthy real estate moguls got that way through high-priced mansions and posh resort property. But in reality, many of the worlds rich and famous got that way via the time-tested path of buying and selling the ugliest houses they could find. Buying ugly houses is profitable, for those who know how to see beyond the blemishes and cosmetic flaws.

The gorgeous houses on the block stand out like supermodels. But if you happen to be the proud owner of the worst looking house on a street where other houses are fashionably turned out, your property will look like a diamond in the rough. And that is good for business if you are a real estate investor. Do nothing to it, and the value of it will still rise, because location is so important, and your drab house is located next to the expensive homes. Do a little cosmetic work such as paint, a new roof, and some landscaping and you can turn a cheap house that was an eyesore into a thing of beauty, both physically and fiscally.

And chances are that your profit margin will far exceed the margins of those houses that had expensive face-lifts before investors purchased them. The value you add to property becomes your equity, and when you sell for a price that includes that additional worth, you can make extraordinary profits. Along the way it is possible to get financing based on the equity you are creating, so you can let your home improvements pay for themselves as you proceed with your fix-up project.

For that reason, some experienced investors will only deal with properties that are rejected by others. By concentrating their energy on neglected houses, they accomplish two important goals. First of all, they limit the competition. If youre buying houses nobody else wants, you will never get into a bidding battle and you will probably never have to pay full price. Secondly, buying ugly houses involves essentially the same process each time. You buy it, fix it or sell it to another investor, and sell it or rent it out as income producing property. By repeating the same strategy over and over, investors can hone their skills and focus on developing a niche in an otherwise undervalued market.

If you decide to rehab properties, you can create a crew of professionals to assist you as a team, and move your crew from one project to the next. One person handles paint and wallpaper, one does the plumbing, and one tricks-out the landscaping. Many investors move with their contractor teams from one place to the next, and continually make cash to invest in future projects. Buy the worst looking house on the street, dress it up, and you will cash in on one of the oldest and most fundamental principles of real estate investment success.