If there is one thing for sure about the real estate industry it’s that the location plays a fundamental role and it determines everything else that you can do. Finding the ideal location can be tricky and it definitely comes with many misconceptions. On the one hand, there are people who believe that choosing only the most expensive and exclusive areas in the city will matter. On the other hand, there are those who believe that finding a medium-priced area but then charging slightly below that will make all the difference.
The reality is that each place has something unique to offer and it is up to the realtor to identify the strengths of each place. Because each place has something to offer that means that the focus should switch from chasing perfection to prioritizing the right audience. Selling a home to a newly-wed couple is not going to be the same as selling to single travelling businessman. The key is to align the good qualities of a particular place with the ideal customer. Here is everything you need to know about finding the best location for a real estate investment?
Choose a market
Before you can make any important decisions, it is important to consider what the appropriate market should be. A good market can be determined based on a couple of significant parameters. Firstly, consider the overall growth of that market. You will want to invest into a market that is expected to grow. In which case you should look at the amazing market possibilities outside your borders. For instance, you can easily choose a realty in Montenegro market, which is located in the beautiful Adriatic region.
This place attracts many investors from all corners of the world because of the country’s incredibly low tax rates and rising number of tourists, with the government also offering citizenship through investment. In addition to that, when choosing a market, you should also consider the home values and make sure to factor in the renovation, maintenance and insurance costs. Lastly, consider the rental rates in the local market area as this will guarantee that you get a good return on your investment.
Find an ideal neighborhood
With market research you want to be specific and precise. That is why your next step should include determining the right neighborhood as well. You can do this based on several key aspects. Income levels, can determine how much return you get. You want to aim at neighborhoods where median income will allow you to meet the one percent rule, where the monthly rent will be as close as possible to the 1% of the total property purchase amount. For optimal results make sure to look for moderate income neighborhood properties that have a lower purchase price yet guarantee stable and sufficient rental rates.
This is the best way to guarantee profit and stay in the game for a long time to come. Some other things to consider include: the local schools in the area, which is really important if your target clients are families with children. In addition to that, make sure that the local area also features amenities that can attract new families. This will include parks, playgrounds, libraries and shopping areas. Lastly, how people commute in the area is also really important since people will simply avoid difficult-to-access parts of the city altogether.
Locating the right property
Once you have narrowed down your search you can finally look at specific properties to buy. You can hire an appraiser to give you a good understanding of how the property that you are planning to buy compares to other homes in the nearby area. The price point of a property that fits into your budget is hardly a good indicator of the right decision. The appraiser can help you compare the intricate details of the local market and offer you insights into the history of local purchases.
Look at the local job market
One of the biggest reasons why people move to a different part of the city is job search. That is why you want to choose a location with a lot of employment opportunities. You will massively benefit if the local job market is diverse enough as it will give you a broader pool of potential clients.
Consider the costs
Before settling any deals make sure to put everything down on paper. Try to distinguish how much money you will invest upfront compared to the preparation costs. This process will involve: the acquisition costs, the closing costs, the down payment and potential renovation costs. In addition to that consider the ongoing costs as well, such as: leasing fees, maintenance, insurance, taxes on the property and the management fees.
As much as it is exciting to invest into property, it is also quite challenging to find an ideal location. In order to optimize this step, make sure to: choose a market, find a good neighborhood and property, research the job opportunities and calculate all the costs.