Making a smart real estate purchase is all about “location, location, location.” So, what should buyers be looking for in an area?
- Growth Potential
Whether you are buying a home or a rental property, you want to buy somewhere that your property value isn’t going to go down. No matter what you are buying, and why, it is an investment. When you invest you don’t want to lose money. So, it is important to look for an area which offers good growth potential.
Some of the factors that may indicate good growth potential include:
- Strong local economy
- Diverse economy
- Increasing population
- Revitalization efforts
- Crime Rates
Crime can directly impact real estate. It can impact income property performance, demand, and values. Crime ridden neighborhoods may represent areas which see rents and property prices decreasing, as well as more difficult property management challenges. However, it is important for investors to look at the direction of crime rate trends, the type of crime, the causes of statistical changes, and to apply common sense to the data. For example; direct property crime can be a big concern for property owners. Other types of crime may not be such a threat for owners. Crime can be cyclical too. Areas can be driven down by crime, and then rebound as serious crackdowns happen. Statistics can also be subjective due to various reporting and enforcement strategies.
- Remodeling and Building Activity
Local renovation and new building activity is a great sign. It means others are investing heavily in an area. They are bringing in new cash and equity. In most cases this activity will also force up rental rates and property prices. It can also make an area more attractive to new residents and visitors. It is wise to not always be afraid of boarded up homes or homes that are in renovation process….this can mean that investors are working in this area and it is on the upswing. Local building permit activities can give clues to future activity like this as well.
- City Plans
Being aware of city plans will allow you to best position yourself in areas that are experiencing revitalization. It will allow for you to get properties cheaper and get the upside. Buying in revitalizing neighborhoods also gives you the opportunity to help your community. By rehabbing one house on the block it starts a trend and in no time, the block has more appeal. This gives the community a sense of hope that revitalization is coming. It also urges owner occupants to take a sense of pride in their individual homes. It encourages owners to upgrade their property in order to keep up with what’s going on in the neighborhood.