Location precedes structure or the building. That should be the emphasis to consider when deciding on where to buy investment property. A respectable real estate investor once said that if you have to choose between a property in a good location but with an inferior building and a property in a lousy location with an impressive building, pick the former. This is because location is constant while structures can be renovated, remodeled or demolished. Of course, you do not have to settle for any of these if you can find an investment property with a fabulous structure located in a fantastic area offered at a reasonable price that fits your budget. So how do you determine a great location?
Pointers On Where To Buy Investment Property
Locations With Sustained Capital Growth. Look for places that are registering capital growth. This could be a promising suburb with an exceptional attraction or located near the city. This may also be a local town with a thriving industry. Most often, these places bustle with a robust economic activity. Properties that are near schools, workplaces, malls, parks, beaches and other important establishments and attractions and are accessible to public transportation would most likely make a good investment. You can target families with kids studying or adults working in these institutions as tenants. An area with a healthy economy also means that the population there can pay for rental. Ten to 20 years down the road, properties in capital growth areas will also allow you to earn not just from monthly rental, but also from capital gains once you eventually decide to sell the property.
Properties In The Buyer’s Market. When deciding on where to buy investment property, another important consideration is the real estate market cycle. Go for areas that are in the Buyer’s Market. This phase is characterized by a decline in home values and properties remain in the market for extended periods. This is the time when you can buy cheap and wait for the next Seller’s Market, during which housing prices go up, before you sell. If you want, you may also buy investment properties during the early phase of the Seller’s Market for flipping since selling goes at a quicker rate at this point.
Properties With Good Rental History. It would be great if the property you are eyeing already has existing tenants so that you can fill in the landlord shoes and start receiving monthly rental income right away. However, for your protection, check on rental history record; how the tenants are, if there were extended periods of vacancy and reasons for such.
Properties Away From The War Zone. Avoid properties in neighborhoods that have the potential for strife, violence and have high crime rates. Although you will not live there, you may have a hard time attracting tenants or you may not be able to find an interested buyer when you decide to sell it. Also think twice about locations that are prone to calamities such as flooding and earthquake.
To help you decide on where to buy investment property, consider locations that are in the Buyer’s Market, peaceful, indicate capital growth and that have great potential for occupancy.
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