Corporate Finance: Selling off the Properties - Essay Example

It's very possible that one will buy-in at the right moment. After all, in this case, the right moment has already practically been delineated for us.So, let us say that perhaps one buys in at the right moment. The next step is to amass as much property as possible while the values are still low.The same principle which holds true for selling stock on the stock market also holds true for real estate. Buy low, sell high.Now, the reason that companies not doing so well is good for other types of businesses is simple.

When stock values are low, it is a good time to buy into those stocks because when stock prices rise, they will be worth more in value.Similarly, if one buys a lot of properties, but perhaps let us say that they are not particularly worth much at the time they are bought-it is untowardly possible, albeit untowardly, that the properties bought may escalate in value. When and if that happens, the investor seeks to make a profit.While values are low in stocks and in real estate, this is the investor's dream.

While he can buy stocks and real estate relatively cheaply, since many people are in a bad state of affairs financially, he will later reap the financial rewards of having taken advantage of the low prices. Investors will short stocks when [prices decline]."1This investor can then turn his finds into profit. This is what will happen when he sells the shares or property (in this case, real estate) at a higher price.This is called selling short. To sell short, one must sell the properties at a higher value than what they were originally worth when he bought them.

The investor may do numerous things in order to increase a property's worth. He may gut and rehab the entire property, also known as "flipping" a property.There is a lot of money to be made in "flipping." People who flip houses basically come in, renovate, and then resell properties at a profit.The basic idea is the same as short selling, which is, you can get more for what you put into the project than you put into it yourself. This is the basic premise of selling short.Obviously, for this particular project, we would want to buy the property when the most dramatic drop in prices was.

We would want to keep buying a property at which time the value would be the lowest. That is how one benefits from selling short.