“For sale” signs have been popping up on the lawns of investment properties in your neighborhood, and now you’re wondering “Should I invest in homes for sale near me?”.
A real estate investment is always a good decision. Where you decide to invest in real estate, however, is what determines whether or not you’ll end up with one of the best real estate investments.
There are so many options in the US real estate market, but beginner real estate investors are typically drawn to their local real estate markets. “Why invest in real estate anywhere else when there are plenty of homes for sale near me?” While it’s true that there are major advantages to investing in homes for sale in your local real estate market, is it always the best choice? Let’s find out.
Investing in Homes for Sale Near Me: The Advantages
“Does investing in homes for sale near me have any advantages?” While certain advantages would be dependent on the specific real estate market you live in, there are general benefits of investing in a real estate investment property for sale that is near you.
Familiarity with the Real Estate Market
Choosing the best real estate investments requires that you have good knowledge of the real estate market. This means researching the location thoroughly to ensure an investment property for sale would be profitable. You’ll also be able to choose which type of real estate investment and what kind of strategy will be best for the location.
When you live in a particular real estate market, you have a lot of knowledge on factors that affect real estate investing. You may not even be aware that you possess such knowledge, especially if you are a beginner in real estate investing. For instance, as a resident, you probably know the state of the economy. This is something that affects your day to day life and, at the same time, the success of real estate investment.
Want more information on your local real estate market, but not sure where to start? Use Mashvisor’s investment property calculator. This real estate investing tool can provide you with the information you need on investment properties in your area. To learn more about our product, click here.
Related: The Advantages and Disadvantages of Buying Rental Properties Close to Home
Easily Inspect and Manage Rental Properties
A home inspection is a must when it comes to real estate investing in any real estate market. When a real estate investor can easily drive to the investment property for sale, a home inspection becomes less of a hassle. Even though you could easily hire someone to do it out-of-state for you, a real estate investor should always walk through the property him/herself and see first-hand what the issues are as a home inspector points them out. This will let you make the final call on whether or not you should invest as well as allow you to start preparing a budget right away.
Related: What to Look for During the Homes Inspection of a Fixer Upper
One of the major advantages of investing in rental properties close to home is the rental property management factor. Many real estate investors are forced to hire professional property management when investing in out-of-state rental properties. With homes for sale near you, you can opt for taking care of the rental property management yourself without worrying about travel expenses.
Save on Rental Property Costs
The idea of taking on rental property management yourself brings us to our next point. A real estate investor can save on certain costs when investing in homes for sale in the local real estate market. For one, the cost of professional property management can be avoided, and you can pocket more of the rental income. There are even repairs a real estate investor can take care of rather than hiring a handyman, as the professional rental property management may do. Any travel expenses, as mentioned, are no longer an issue for the real estate investing budget.
Related: The 6 Hidden Costs of Owning Rental Property
Even real estate investment loans are likely to be less expensive when investing in real estate where you live. Mortgage lenders tend to view out-of-state rental income properties as a higher risk. As a result, fees for mortgage interests, down payments, and even homeowners insurance can be more expensive.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
Real Estate Investment Network
Even if you are just a beginner real estate investor, you may already have built the beginnings of a real estate investment network. How is this possible when you’ve never even thought of investing in real estate until now? Well, ask yourself, “Who do I know that could help me when I invest in homes for sale near me?”.
Know anyone who has bought a house locally? That person can be a great source for a real estate agent and even other rental income properties for sale. That handyman you have used a few times in the past? He can help you in rental property management in the future. A real estate investor may even be able to find tenants much more quickly because of local contacts and thus start making rental income immediately.
Essentially, you are likely to have personal relationships and contacts in your local real estate market to help you when investing in real estate. A real estate investment network can be harder to build when investing in rental properties out-of-state, making it less likely that you’ll be able to find the best real estate investments.
Homes for Sale Near Me: The Disadvantages
“Does investing in homes for sale near me have any disadvantages?” There is one overwhelming disadvantage of investing in real estate in your local real estate market: limiting your options. Just because investment properties are in close proximity to where a real estate investor lives, that doesn’t always make them the best real estate investments out there. There may be more affordable investment properties in other real estate markets that provide a much higher return on investment. In fact, the properties in your location might make for bad investments.
“So, when is investing in homes for sale near me a good choice?” Because this can be a pretty big disadvantage, a real estate investor has to be sure that his/her local real estate market will, in fact, offer some of the best real estate investments with a high return on investment. Let’s take a look at how to answer the question “Should I invest in homes for sale near me?”
Local Real Estate Market vs. Other Real Estate Markets
The only way to know if your local real estate market is a good choice for rental income properties is to study it and compare it to other real estate markets. Here are a few questions to ask when investigating and getting to know your real estate market and the rental income properties there.
Will homes for sale near me thrive due to the real estate market’s conditions?
The first thing a real estate investor should look at is the basic factors of a real estate market that affect the success of rental income properties. A real estate market should have a high demand for rental properties (depending on what real estate investment strategy you go with – Airbnb or traditional). This will ensure the best return on investment.
A few of these factors include the economy, job growth, population growth, price-to-rent ratio, supply and demand, and whether or not it’s a buyer’s market or a seller’s market. These can be researched online or found in one of the blogs on Mashvisor about popular cities for real estate investing.
If all of these factors have positive trends, the next step is to take a look at the real estate investing elements in the real estate market. What is the median house price? What kind of return on investment can you get? This information is a little harder to come by in a simple online search of the real estate market.
Instead, use a real estate investing tool, like Mashvisor’s investment property calculator. It will provide the median house price, cash on cash return, cap rate, rental income, and Airbnb occupancy rate for the real estate market of interest. In this way, you can decide if homes for sale near your location are some of the best real estate investments or not.
To start out your 14-day free trial with Mashvisor, click here.
Are local neighborhoods suited for buying and renting out homes for sale near me?
Now that you have concrete information to decide if your real estate market is a good place for real estate investing or not, you have to narrow it down to the neighborhoods around you. As big as some cities are, investing in a real estate investment property for sale across town can negate the advantages of investing in real estate close to home.
A neighborhood analysis can reveal if the homes for sale near you make for the best rental income properties or not. Just as you reviewed the median house price and return on investment metrics for the overall real estate market, you must get these numbers for the few neighborhoods around you where you have seen “for sale” signs. Perform neighborhood analysis quickly and accurately with an investment property calculator.
Have other real estate investors found success with homes for sale near me?
While the numbers and statistics you have found up to this point in answering our questions are a good representation of reality, it’s always a good idea to take a look at other local real estate investors.
Check investment property listings, both for rental income properties for sale and for rent. For the investment property listings for sale, how do the prices compare to the median house price you found in your research? Are they much lower or higher? Have real estate investors been forced to lower prices because of lack of demand? Have they raised prices because of an increase in demand for rental income properties? How long have some of the investment properties been listed? All of these can be indicators of a successful or a struggling real estate market.
When it comes to investment property listings for rent, for how long have some real estate investors/landlords been advertising? Have you noticed any that lowered or raised rent prices shortly after listing? Again, this will let you know if you’ll get the rental income and return on investment that you need in order to succeed.
How does my real estate market compare to other real estate markets?
By now, you have a pretty good idea of whether your local real estate market will be a source for the best real estate investments. Just to be sure you’re not missing out, investigate other real estate markets. This can be done quickly with an investment property calculator. Review the return on investment metrics for any other city in the US real estate market.
A good place to start is to compare your local real estate market to the 9 Best Cities to Buy Rental Properties for 2018.\. How does it stand up to the competition?
“Should I invest in homes for sale near me?” While the advantages are many, the one major disadvantage can be a dangerous one. You don’t want to miss out on better real estate investing opportunities. Make sure to answer each and every one of the questions provided here to ensure your local real estate market is one of the best places to invest in real estate.
Want to invest in your local real estate market but don’t know how to start? Then read: How Can I Find Real Estate Property for Sale Near Me?
