Location, Location, Location
It is one of the most common mantras in the real estate business, and the repetition couldn’t stress the concept enough. The location of your investment property will have a direct effect on how prosperous it will be. There are a number of things to look out for when finding the ideal investment property location.
The most profitable investments are mostly going to be found in the best locations. Here, we explain what makes up good location criteria for the most profitable investments, and the importance of location in real estate.
Molding Good Property Location Criteria
When you’re on the hunt for the most profitable investments in real estate, you have to take the location into account. The numbers are only a financial reflection of how your rental property could perform. There are social and economic factors to take into account.
There is no use in owning a rental property that has great projected numbers but is vacant due to outside factors. Below, we list some attributes that mold your most profitable investments geographic portfolio.
Large Scale Criteria
Jobs & Economics
The only way your rental property will be considered one of the most profitable investments is if your selected tenants have jobs. When buying a property with tenants, jobless customers means no money in their pocket, which in theory, means your pocket suffers as well. Rent has to go down, vacancies jerk up, and you lost the ability to sell for top dollar. This knocks you off the pedestal of the most profitable investments.
Areas with diverse job opportunities and a stable job market are a huge plus. You’re not going to find an all-around perfect investment property; those are the unicorns of real estate. However, an area with a diverse source of jobs, mix of worker types, rising median salary, and low unemployment rate is a huge attraction for both investors like you and potential tenants. That is your key to getting right back on the pedestal of the most profitable investments.
With this attribute, we are talking aspects that can pull people in and cause the population to grow. Weather, housing price, natural attractions (mountains, parks, lakes) and community politics all attract people to a location. You want to see this attraction because theoretically, an increasing population will tend to increase housing demand. With the most profitable investments, tenants have a demand, and you have the supply. You make the money, since high demand but low supply means higher rents and values.
Price to Rent Ratios
The most profitable investments get “A+s” when it comes to this value. This is a simple way to get a financial glimpse of an area’s overall economic efficiency (or potential profitability). The price to rent ratio is found by dividing the median housing price by the median yearly rent. The higher the price to rent ratio, the worse the market is for real estate investing.
Beware! Price to rent ratios are not decisive factors. Do not be fooled by relatively low price to rent ratios as they may be low for a reason (usually bad reasons). Balance the value with other factors, as they should all be taken into account equally. We know it can be tempting, but due diligence is a must here.
Small Scale Description
We can all agree that convenience is a contributing factor to the success of the investment property you own. The most successful real estate investors choose the locations that provide the most convenience for their tenants. This means buying rental properties that are near grocery stores, gas stations, good schools, and recreational centers. The more convenient the location, the more attraction you will bring to your investment property.
We advise you to use Mashvisor’s product once you find that convenient location. Finding the position is one thing, and only the first step. You have to take a look at the numbers to get an idea of what cash flow you can expect. That is where we come in.
We provide you with a number of analytics to make that decision a little easier on you. With an investment property analysis, the numbers speak a thousand words, so don’t neglect them. Allow them to speak, and allow Mashvisor to bring them to the light.
To learn more about how we will help you make faster and smarter real estate investment decisions, click here.
Yes, romantic. A location has got its romance going on when it can give you those extra features you know your tenant will love. Cleaned up landscaping, nice views from the window, and appealing cafe’s all scream a little romance. The most profitable investments in real estate are the ones that bring their tenants flowers & home cooked meals and bring their real estate investors cold hard cash. Look for romance.
A good tip we can give you is to get out there and search for it yourself. Seriously, if you feel a kind of warmth from the location, chances are so will your potential customers. There is no excuse if you’re investing cross county or in another state. These in-person visits that put you in the place of a real estate customer are crucial.
Visits like that will get you on the micro-level. Being here shows you highly important factors of “romance” that don’t show up on searches from your computer.
Safety and Crime Rates
You want to feel safe and secure in an area. The most profitable investments give you a sense of both financial safety, along with the sense of protection. The last thing you want is to find yourself in an area with high crime rates. Fear is an unattractive attribute in a neighborhood, so work on searching for the area that eliminates that fear. Protecting both your tenants and your property investment is protecting your rental income.
Wrapping it Up
These are only some of the many reasons why a good real estate location makes up the most profitable investments. It is no secret that where your location is directly affects the attractiveness of your income properties. Although the numbers can give you an idea of how financially successful your property can be, they withhold a good amount from you.
The best investment properties have some of the best locational attributes. To find your most profitable investments in real estate, look for the best rental property location that fits the criteria.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.