Real estate investing is rarely done for fun. Real estate investors just don’t decide on any given day that it would be fun to take money out of the bank to buy a tenant problem in any apartment building. The real fun is taking the kids to Disney World. Real estate investing is about making money. And the reason why people start investing in real estate is to earn a lot.

It’s not about luck, though. The most successful real estate investors don’t buy income properties by tossing a coin. Successful real estate investors understand that real money is made in real estate investments when value can be added to the property. If you’re new to real estate investing, you may be unaware of six things that can add value to an investment property. Therefore, we recommend that you keep them in mind whenever you buy or own a rental property.

1. Inflation- Inflation increases the value of rental property simply because of the increased cost of replacing the property. The increased cost of land, building permits and fees, materials, or actual construction adds value to properties that are already in operation.
2. Improved infrastructure- This is the effect due to development around the property. Roads, electrical, water and sewage systems, police and fire protection, parks, hospitals, etc. all have a major effect on property value.
3. Economic conversion- When the use of a property changes, such as when new zoning laws allow you to convert a small apartment building into offices or a single-family home into four apartments, you can add value.
4. Higher cash flow- Real estate investors are understood to buy the cash flow in rental properties. An investor who can increase cash flow (assuming other factors remain the same) will increase the resale value of the income property.
5. capital improvements- Unless the land value makes capital improvements superfluous, adding additional apartments to a building, or an extra bedroom or bathroom when the market demands it, can increase property value.
6. Offer and demand- The shortage of available rental properties at a time when the demand for rental income properties is high drives up the value of rental properties. This makes it important to pay close attention to the local market, because when your city or region has room to absorb more, and investors are there to buy, the value of your rental property will rise.

Most of these factors are not in the hands of a real estate investor. He cannot (for example) control the improved development of the surrounding area or prevent the construction of additional units that may flood the market and thus reduce his rents. But you can investigate it.

Meet with your local planning and building department. Ask them about their comprehensive plans for the area. Find out if the zoning can be changed to allow more profitable use of the property. Find out how many permits have been issued to builders for the construction of comparable rental properties in the area.

Always keep in mind that successful real estate investing is not accidental. Real estate investing is a business, and it’s up to you (as CEO) to diligently research ways to make that business profitable.