From ‘Worthless’ Laundromat to $2.3M: 5 Hidden Property Plays

Five years ago, I got a call from a frustrated broker who couldn’t sell a property that had been on the market for eight months. It was a rundown laundromat in what most people considered a declining neighborhood. The asking price had dropped from $850,000 to $650,000, and still no takers. Every investor who looked at it saw the same things: outdated equipment, tired interior, sketchy location, and the “dying” laundromat industry.

But I saw something different. The neighborhood demographics were actually improving – young families were moving in because housing was affordable, and most lived in apartments without in-unit laundry. According to realmo.com, the location had excellent foot traffic from a nearby community college and three apartment complexes within two blocks. Most importantly, the previous owner had completely mismanaged the business, creating an opportunity for someone willing to invest in modernization.

I bought the property for $580,000 and immediately invested $180,000 in high-efficiency machines, a mobile app payment system, free WiFi, comfortable seating areas, and a small café corner. I added services like wash-and-fold, pickup and delivery, and dry cleaning. Within 18 months, monthly revenue increased from $12,000 to $34,000. Two years later, I sold the property for $2.3 million to a REIT that was assembling a portfolio of modernized laundromats.

That deal taught me that some of the best investment opportunities exist in property types that most investors dismiss without proper analysis. While everyone chases the same apartment buildings and retail centers, extraordinary profits can be found in properties that others consider undesirable, outdated, or too complicated to understand.

Why Smart Money Hunts Where Others Won’t Look

Most real estate investors follow the crowd, competing for the same “safe” property types that everyone recognizes as good investments. This herd mentality creates pricing efficiency in popular segments while leaving tremendous opportunities in overlooked markets.

The psychology behind this is understandable. Apartment buildings and office complexes feel familiar and safe. You can easily find comparable sales, financing is readily available, and exit strategies are clear. But this comfort comes at a cost – lower returns and intense competition that drives prices up and yields down.

Undervalued property types offer several advantages that most investors overlook. First, there’s less competition, which means better pricing and more time to conduct thorough due diligence. When I’m looking at an industrial property or mobile home park, I might be one of three serious buyers instead of competing with dozens of investors.

Second, these properties often have operational inefficiencies that create value-add opportunities. The laundromat I mentioned wasn’t failing because laundromats are bad businesses – it was failing because the owner hadn’t adapted to changing customer expectations or invested in the property for decades. These operational problems become profit opportunities for investors willing to modernize and improve management.

Self-Storage: The Recession-Proof Investment Most People Miss

Self-storage might be the most overlooked high-performing real estate investment class in America. While investors chase apartment buildings with 4-6% cap rates, well-located storage facilities routinely trade at 6-8% cap rates and offer better growth potential with less operational complexity.

The business model is beautifully simple: people accumulate stuff faster than their living spaces can accommodate it, creating steady demand for storage space. Unlike apartments, storage facilities don’t have leases – customers pay month-to-month, allowing for regular rent increases without tenant turnover costs. Most facilities also require customers to provide their own locks, shifting security responsibility away from the owner.

The operational advantages are significant. Storage facilities typically require minimal staffing – many operate with just a part-time manager and automated access systems. Maintenance costs are low because there’s no plumbing, kitchens, or HVAC systems to repair. Property taxes are usually lower than residential properties because storage facilities don’t strain municipal services like schools and police.

I invested in a self-storage facility three years ago that perfectly illustrates these advantages. The previous owner was an elderly man who hadn’t raised rents in over five years and was managing the property with paper files and cash payments. The facility was 85% occupied at an average rent of $65 per unit, generating about $180,000 annually on a $2.2 million purchase price.

Within six months, I implemented online management software, raised rents to market rates (averaging $85 per unit), and added climate-controlled units that commanded premium pricing. Occupancy increased to 94% as the improved management and online presence attracted more customers.

Mobile Home Parks: The Millionaire Maker Nobody Talks About

Mobile home parks might be the most misunderstood investment opportunity in real estate. Most people think of trailer parks as investments for slumlords, but the reality is that well-managed mobile home communities provide affordable housing to working families while generating exceptional returns for investors.

The business model is unique and powerful. Unlike apartments, where you own both the land and the structures, mobile home park investors typically own only the land and infrastructure while residents own their homes. This creates a situation where tenants have invested $50,000-$100,000 in a home that’s expensive and difficult to relocate, making them extremely stable tenants.

The average cost to move a mobile home is $10,000-$15,000, and many communities don’t accept older homes, making it financially impractical for residents to leave over reasonable rent increases. This “tenant stickiness” allows for consistent rent growth while maintaining high occupancy rates.

I purchased a 67-space mobile home park two years ago that demonstrates these dynamics perfectly. The park was 78% occupied with average lot rents of $285 per month – significantly below market rates in the area. The previous owner was hands-off and hadn’t invested in infrastructure improvements for decades.

Over 18 months, I invested $340,000 in road repairs, new water lines, upgraded electrical service, and landscaping improvements. I gradually increased lot rents to $385 per month while improving occupancy to 91%. The combination of higher rents, improved occupancy, and better expense management increased net operating income from $142,000 to $267,000 annually.

Based on typical mobile home park cap rates of 6-7%, the property value increased from $2.1 million to approximately $3.8 million. The total return, including cash flow and appreciation, exceeded 40% annually over the improvement period.

Industrial Properties: Riding the E-Commerce Wave

The explosive growth of e-commerce has transformed industrial real estate from a sleepy backwater into one of the hottest investment categories. But most individual investors still overlook industrial properties because they seem complicated and unfamiliar compared to residential investments.

The fundamentals driving industrial demand are powerful and accelerating. E-commerce sales continue growing at 10-15% annually, requiring massive amounts of warehouse space for inventory storage and distribution. Same-day and next-day delivery expectations are forcing retailers to locate distribution centers closer to population centers, increasing demand for industrial space in urban and suburban markets.

Last-mile delivery facilities – small warehouses located close to consumers – represent a particularly attractive subset of industrial investing. These facilities, typically 20,000-100,000 square feet, serve the final link in the delivery chain from regional distribution centers to customer doorsteps.

I invested in a 45,000 square foot former manufacturing building that I converted into a last-mile delivery facility. The building was vacant and outdated for modern manufacturing, but perfect for package distribution. I purchased it for $1.8 million and invested $400,000 in loading dock improvements, LED lighting, and updated electrical systems.

Within four months, I leased the entire facility to a regional logistics company at $8.50 per square foot – significantly higher than the $6.20 per square foot the previous manufacturing tenant had paid. The improved lease rate and longer lease term increased the property value to approximately $3.2 million based on recent comparable sales.

Specialized Housing: Capturing Demographic Shifts

Several specialized housing types are experiencing strong demand growth due to demographic changes, but they remain under-invested because most investors don’t understand these markets or perceive them as too niche.

Senior housing represents one of the largest opportunities as baby boomers age and require specialized living arrangements. The 65+ population is projected to grow by 50% over the next decade, while purpose-built senior housing inventory has lagged behind demand in most markets.

I partnered with an experienced operator to acquire and reposition a struggling independent living facility that had been poorly managed and marketed. The 120-unit property was only 65% occupied despite being located in a high-income area with strong senior demographics.

We invested $2.1 million in common area improvements, updated apartments, enhanced dining facilities, and expanded wellness programs. More importantly, we hired experienced senior housing management and implemented professional marketing targeting adult children who influence housing decisions for their parents.

Occupancy increased to 89% within 14 months, and we were able to increase average monthly fees from $3,200 to $4,100 as we improved services and amenities. The combination of higher occupancy and increased revenues improved the property’s performance dramatically, creating substantial value appreciation.

Mixed-Use Development: The Future of Urban Investment

Mixed-use properties that combine residential, retail, and office space in single developments are becoming increasingly attractive as urban planning trends favor walkable, integrated communities over single-use developments.

These properties offer several advantages over single-use buildings. Diversified income streams provide stability because weakness in one sector can be offset by strength in others. Retail tenants benefit from built-in foot traffic from residential and office tenants, while residents enjoy convenient access to shopping and services.

I invested in a small mixed-use development that includes 24 apartments above 8,000 square feet of retail space. The retail space includes a coffee shop, a dry cleaner, and a small restaurant that serves both residents and the surrounding neighborhood. The apartments command 15-20% premium rents compared to similar units without ground-floor amenities.

Due Diligence: Avoiding the Value Traps

Investing in undervalued property types requires more sophisticated due diligence because you can’t rely on standardized analysis methods that work for conventional properties. Each property type has unique risks and opportunities that must be carefully evaluated.

Market analysis becomes more complex when you’re dealing with specialized property types. For self-storage facilities, you need to understand local demographics, housing density, and competition within a 3-5 mile radius. For mobile home parks, you need to analyze local employment, housing affordability, and zoning regulations that might affect future development.

I learned this lesson early when I almost invested in a mobile home park that looked attractive financially but was located in a municipality that was actively trying to eliminate mobile home communities through zoning changes and aggressive code enforcement. The legal and political risks would have made the investment untenable regardless of the financial returns.

Building Your Undervalued Property Strategy

Success in undervalued property investing requires a systematic approach that builds expertise over time rather than jumping randomly between different property types.

Start by focusing on one or two property types that align with your local market conditions and personal interests. Become an expert in those areas before expanding to other types. This focused approach allows you to develop the specialized knowledge needed to identify genuine opportunities and avoid expensive mistakes.

Build relationships with professionals who understand these specialized markets. This includes brokers who focus on specific property types, lenders who finance unusual properties, and property managers who have experience with specialized asset classes. These relationships often provide access to off-market opportunities and valuable market intelligence.

The Future of Undervalued Investing

Several trends are creating new opportunities in previously overlooked property types while potentially making others less attractive.

The continued growth of e-commerce will likely drive demand for industrial properties, especially last-mile delivery facilities and smaller warehouse spaces in urban areas. Demographic aging will increase demand for senior housing and healthcare-related real estate. The shift toward flexible work arrangements may create opportunities in co-working spaces and hybrid residential-office developments.

Technology is also creating new investment opportunities while potentially disrupting others. Automated storage facilities reduce operating costs and improve customer experience. Smart building systems make industrial properties more attractive to tenants while reducing operating expenses for owners.

Making It Work in Practice

The laundromat investment I described at the beginning wasn’t just about finding an undervalued property – it was about recognizing how demographic trends, technological changes, and operational improvements could transform a declining business into a thriving investment.

This same approach works across all undervalued property types. Success requires understanding the fundamental drivers of demand for each property type, identifying operational improvements that can enhance performance, and recognizing when temporary problems create permanent opportunities.

The most important lesson is that undervalued doesn’t mean cheap – it means priced below true economic value based on future income potential. Sometimes the best undervalued properties are expensive in absolute terms but still represent excellent value when you consider their income-generating potential after proper repositioning.

Written by Billy Guteng. August 18, 2025

Billy is a content writer for Kukun. He was born in France, and has lived in multiple cities around the world ever since. He loves art, design and architecture as well as construction and real estate.