With the rise and fall and rise again of the American economy, the world of investments can be in tumultuous place. While the economy is in no danger of a stock market crash anytime soon, since the regression in 2008, people have been projecting another burst in the housing bubble. As such, real estate experts all over the Internet are saying now is not the time to buy, and offering slick “new solutions“ which will help ease your worries when it comes to investing in real estate. Yet the secrets they are offering are merely dressed up descriptions of common knowledge. At the end of the day what each of these “experts“ are saying is this, “Location, location, location.”
This is an adage that even five-year-olds know. When it comes to purchasing any form of real estate—be in a building, land, or a first home—your proximity to what your target demographic is seeking is crucial. Time does not change the value of an area. While the value of an area can depreciate over time, time is not the factor here—community wealth is.
When it comes to investing in the current United States housing market, location is key. If you are wanting to open a new five star hotel you are not going to stick it in the middle of the projects. That’s just bad business sense. When it comes to investing in real estate you want to keep your target audience in mind.
Therefore, if you want to open a five-star hotel, the first place you are going to look is in cities. Cities not only garner a great deal of travelers, but the residents often are wealthier than those in small towns simply due to the expenses of living in a city. According to Anthony Guerriero of Manhattan Miami, New York City is the best city for investing in real estate due to its job diversification and large number of residents with high paying jobs. Oftentimes city dwellers are not looking to own property but to rent it. This makes owning a rental property in a place like New York City exceptionally lucrative.
However, if you are looking to invest in homes, the suburban regions of cities such as New York City are your best bet. These tips are basic and have not changed because of time. Yet, there are some things to consider beyond demographic commonsense when it comes to choosing your location.
When it comes to choosing your location, your low income areas may not be a bad investment. Consider the following questions. Has the local public office recently made rehabilitation efforts? Are crime rates lowering and safety rates rising? Are middle-class citizens moving into the premises? Is the property in an Opportunity Zone?
Considering these questions may make a B rate or even C rate neighborhood a good investment—especially for a newer investor who can only afford a fixer-upper.
Often times these locations are found just 20 minutes outside of cities and can be a gold mine for investors. Large cities like Tulsa, Oklahoma or Plainfield, Illinois started out as tiny little farm towns, but business found them. Even though the cities are not on the same caliber as New York, they have a booming population that is ripe for real estate investment. Doing your homework on a small town’s history and current demographic statistics might just let you in on the ground floor of something truly spectacular.
When trying to corner a market, one of the wisest business moves is not to directly attack your competitors but to attack adjacent to them. Find what your competition is not offering your demographic and offer it like nobody’s business. Show your target demographic that you can provide them with what their competitors cannot, and then add in the features that your competitors have.
Be sure in this process to study the other regions—big and small—in the surrounding areas. You may have found a little town that is nice and could suit your needs, but 20 minutes out of that town you might find another one with even better statistics than your initial search.
Be willing to be flexible in the beginning stages and find the place that you are really hoping to land. Location is the one area of real estate where you never want to settle.
When it comes to breaking into the housing market the place that timing matters is at closing. This means that once you’ve chosen your target market and location, you need to optimize your financing and closing process.
Set up accounts with banks the day you start looking for houses. Get your mortgaging, licensing and permits in the approval process even before you know what you want to purchase.
Be sure to set up email and text alerts to update you on properties and prices that you’re looking for.
When you find the house that you wish to purchase, be prepared to run the numbers and put in an offer on the same day so that you do not miss out. Be willing to close quickly as well. When fear comes knocking, shut him out. He’s the only one you don’t want renting your space.
At the end of the day, it’s never too late to invest in real estate. You need to be willing to do your homework and understand that real estate is a location game. Learn your major cities yes, but be willing to look at your smaller regions surrounding those cities. More than likely this is where your bigger homes are going to be located. So if you don’t want to rent out an entire apartment complex, considering smaller regions surrounding big cities is an excellent place to start. Consider their demographic, consider their income rates, consider if it’s an Opportunity Zone, and consider if the area is on the rise. By answering these questions, you will help put yourself in a good position to invest. During this research phase, be sure to get your financing and licensing squared away so that you are ready to move forward as soon as you are prepared to.