Choosing where to make your next investment in real estate is a tough decision. Unless you are trying to flip houses, the location you choose will be yours for the long haul. So, you should put a great deal of thought into choosing where you want your money (and possibly your family) living for the next 20, 30, or even 50 years. But, how can you do it? What makes one location better than another for real estate investments? The tips below will help you answer these questions and take you one step closer to owning your dream property.
Stick With What You Know
If you’re going to invest tens or hundreds of thousands of dollars into property, be sure that you know the area. You shouldn’t invest in property that is somewhere you are not familiar with; moreover, you should never invest in property sight unseen. If you’ve lived in an area for years, you have a deep understanding of the potential for growth, local regulations, and other information that you would not have access to somewhere else. However, not everyone wants to invest in their hometown, which brings us to the next tip…
Do Your Research
If you don’t want to invest in an area that you are already familiar with, then make sure to do your research. This means learning about the aggregate property values in your neighborhood over time. It also means researching local government ordinances related to owning/renting/selling/buying property. If possible, talk with a few locals about growth potential in their area (new businesses moving in, average resident income, etc). This way, you can have a much better idea of what you’re getting into and the potential for your property to increase in value over the years.
Look At Specific Data Points
It’s easy to say “do your research,” but what does that actually mean? Here are a few of the most important metrics that you should look at for a given location:
- Job growth and economic stability
- Population growth
- Price/rent ratio
- Crime rates
- School districts
- Public transportation
- More localized and subjective information:
- Visual appeal
Though all of these factors are important, you will need to set priorities. For example, if you plan to live in this new location, things such as crime rates and convenience will probably be much higher on your list. If you have children, you will want a quality school district. Depending on your transportation needs, you will want good public transportation. However, if you are simply looking at buying property as a financial investment (and not a possible living arrangement), you will want to factor all of these elements into your equation.
Give Yourself Options
You may fall in love with the first property you see, but you should always look into multiple locations. This way, you can compare some of the data points outlined above and determine which location will ensure the best long-term investment for you. More often than not, this forces you to make some tough decisions, but it also helps make sure that you don’t sink thousands of dollars into something you’ll regret.