When it comes to real estate investing, ‘location location location’ becomes your key mantra. It is not very surprising that location plays a major role in your property’s value and how it changes over time. Just like land, if bought in a strategic and thriving location, the value of your real estate can appreciate by tenfold and increase your investment’s ROI significantly. Whether you choose to invest in a condo or a single family home, pay attention to the area you are investing in.
So why does location matter so much, you say? Well, for starters a house is immobile and in turn its value in the long run is contingent on its location. Think about it this way: Would you buy a house in the middle of nowhere and hope to sell it in the near future? Or would you rather buy a beat up home that requires lots of renovating and fixing but is situated in a great location? If you are like most people, you would pick the latter of course.
It is a simple equation: rental property + (location location location) = successful long-term investment. Buying a house without having any consideration of the location is a major setback to your real estate business. You will be spending lots of money financing a home, so better invest wisely from the get go.
Related: The Pros and Cons of Hiring a Real Estate Broker
What to expect when you invest in a good location
1. Price Goes Up
Two identical homes can vary in cost depending on the location each is situated in. For example, a house in the city can cost way more to buy than a similar house near the outskirts of the city. Finding real estate in a prime location is the gateway to profitable returns and long term investment. And few years down the line when you decide to sell your real estate property, be sure that your property will sell really fast because the area is in high demand. Research a range of areas you are interested to invest in and compare their cap rates and cash on cash returns to get the most out of your investment strategy.
Real Estate Affirmation: Location location location is the key to making more money.
2. Cost of Living Goes Up
This one is pretty intuitive because when you live in an expensive city, the cost of living shoots way up consequently. New York City is a good example as many people find it extremely unaffordable due to the high rent and high cost of living altogether. When researching potential homes to buy, you have to calculate the cost of living (i.e., rent, food, gas, transportation) in each area and choose one that makes more sense financially. However, landlords don’t have to worry about the cost of living in this particular location as they will not be the ones living in the investment property. For them, investing in a prime location is a pretty sweet deal which translates into high rental income or/and higher property price.
Real Estate Affirmation: Location location location ups the selling price on your real estate investment.
3. Safe Neighborhood
Buying real estate in a good location comes with safe neighborhoods and little to no criminal activity, which makes it easier to sell or rent your investment property much faster. If you own a rental property, let’s say a multi-family home, it makes complete sense that your potential tenants will be a family. If this is the case, do not expect high demand on a real estate property if it’s in a dangerous location.
Real Estate Affirmation: Location location location pushes demand up.
Related: Investing in the Right Neighborhood
Everything becomes convenient and readily available when you live in a prime location. It goes without saying that a good location facilitates the way of life and the majority of tenants rent homes where it is convenient for their lifestyle. Invest in a rental property that is within close proximity to shops, schools, restaurants, transportation, etc. You will quickly attract the right tenants for your rental property and maintain low vacancy on your investment.
Real Estate Affirmation: Location location location is all it takes to materialize positive cash flow returns.
5. Easy Access
Invest in an area with easy access to commercial districts, good quality schools, and public transportation. This will make you rental property a lot more lucrative and highly demanded for rent. Most importantly, this will boost the value of your investment property in the long term.
Real Estate Affirmation: Location location location makes your property more attractive instantly.
6. Nearby Amenities
If you plan on renting your single family or multifamily home, consider buying rental real estate nearby good schools, playgrounds, parks, and other fun attractions. Pick neighborhoods that are largely populated with families, as that tends to attract more family tenants. Generally speaking, amenities make or break the overall value of your rental property.
Real Estate Affirmation: Location location location lets you attract good tenants.
7. Growing Job Market
A prime real estate location has a low unemployment rate and a growing job market. Capitalize on that when choosing your next real estate investment and keep an eye on real economic and market conditions in your area of choice.
Real Estate Affirmation: Location location location is a surefire way to make your investment reap profits.
8. Low Vacancy and High Rental Income
In a nutshell, good location brings in high rental income as well as low vacancy fluctuations. Make sure you keep that in mind. Landlords would much rather have tenants stay for a long duration of time so they guarantee their steady cash flow.
Real Estate Affirmation: Location location location becomes your leverage. Remember that!
Related: 5 Ways to Create a Positive Cash Flow Income Property
9. Better Environment
Location with aesthetic gives you bonus points. Make sure your rental property has lots of greenery and eco-friendly features around the house and in the neighborhood. This sets your property apart and makes it a keeper with your potential tenants.
Real Estate Affirmation: Location location location is a prerequisite for successful real estate investing.
Best Cities for Real Estate in 2017
These cities score the highest year-over-year population growth, job growth, and home price growth in 2017. The key mantra ‘location location location’ in real estate investing is found in these cities this year:
- Dallas, Texas
- Jacksonville, Florida
- Orlando, Florida
- Seattle, Washington
- West Palm Beach, Florida
- Salt Lake City, Utah
- Tampa-St. Petersburg, Florida
- Nashville, Tennessee
- Fort Worth, Texas
- Grand Rapids, Michigan
- Sacramento, California
- Charlotte, North Carolina
- Raleigh, North Carolina
- San Diego, California
- Las Vegas, Nevada
- Boston, Massachusetts
- Columbus, Ohio
- Atlanta, Georgia
- Phoenix, Arizona
- San Antonio, Texas
In your choice of a top investment location for your next rental property, check out Mashvisor for many, many available properties and ready figures on them. Happy Investing!