Donald Trump makes billions of dollars purchasing run down or vacant properties and in fact whole blocks of residential properties and building fantastic complexes on them.

Top entrepreneurs make billions of dollars buying into troubled companies and turning them into financial powerhouses. 

There is a theme here. If you look closely at the strategies of successful investors you will find a strong principle hiding in all their actions. On the other hand, if you look closely at the strategies of struggling investors you will really find them not understanding or using this principle.

So what is this principle and how can you profit from it?

It is the law of supply and demand. If you remember that supply and demand creates growth in real estate values and growth in rent, this will help you become a more successful investor. It will separate the good deals from the bad.

One way to make this all work for you is to buy properties that are in high supply and low demand and turn them into properties that have are in low supply and high demand.

With residential real estate the best way to increase demand is to make your property more desirable - this is a strategy we use at Metropole when buying older, rundown properties and undertaking renovations and making the properties more attractive. This increases the demand, as well as increasing their capital value and increasing the rental.

One example of this is the property recently bought by for a client for Metropole Buyers Agency in Melbourne. Just before Christmas, we purchased an apartment for Rod and Carol, who live in the ACT. It was a great apartment in Prahran, an inner south-eastern lifestyle suburb of Melbourne.

The property was in what is considered to be a trendy area and in an attractive block but really wasn't appealing in its current state.

I managed to negotiate a great price on the property, and organised access for the builder prior to settlement to do his preliminary works.

The day after settlement, the builder moved in to give the apartment a total overhaul. For just under $30,000, Rod and Carol's apartment got a new kitchen and bathroom, new carpets, new split system air-conditioning, a new coat of paint ... in fact a complete makeover.

For every dollar they spend they should increase the value of their property by around $1.50 and they should increase the rent considerably. This is a great way of making your own capital gain - buy under market value, add value through refurbishment and ultimately create a property with high demand.