So how do you know what the trends are in real estate? They say all real estate is local, is that true? These days, if you want to find out if something is trending you can look on Twitter or use Google trends to see how various search terms are gaining popularity.
But the best research is local, talking to real estate agents in the area. However, don't forget that real estate agents make money selling property, so they have an incentive to perhaps push you towards buying if they're selling in the area.
If you do your research you can find the key pieces of information that can help you discover valuable properties. This research starts with reading local papers and websites - not just Trulia or Zillow, but local real estate websites. Plus, most local real estate markets have a radio program or even a group that meets to talk about the real estate market in their area.
- Population growth
- New generation of buyers
- Development laws
- Construction costs
- Immigration (the increase in the Hispanic community and their growing wealth will create more home owner seekers and raise property values)
- Investors like you (demand goes up for property)
- New businesses moving in
- Change in laws that benefit business and enhance growth
Look for markets where demand for housing will increase (population growth) and where supply is low. Areas that commonly see growth and sustained demand are near universities especially schools that are expanding, a new freeway or public transportation line, new stadiums or sports complexes, businesses that are planning on relocating, redevelopment or historic areas of a city (unique laws that make these areas valuable long term and well known), a new park that’s coming into an area or school, local airports, a big shopping or entertainment development with a lot of backing and thus advertising dollars.
You are looking for renters, right? Try to buy in areas where the cost to buy a home is high. Near a university is a good example, or a growing company. This pertains to bigger cities where the cost to own a home in central areas is prohibitive to most. Maybe you define your search to a demographic, are teachers and students looking for housing? Is a new company relocating and in need of housing?
Also, it’s important to buy in an area that's not reliant on one business. If it is, analyze the business and its longevity, as well as your goals for the property, maybe you don’t foresee yourself owning the property for a long period of time and the market warrants a purchase even though the area is stabilized by one company for the majority of its employment.
This gets back to doing your research, what job market is set to boom? Is it biotech companies that are expanding or green technologies? Perhaps you want to research companies along with looking for property. Today, with gas prices rising, public transportation is increasingly more of a factor. Owning property that's ahead of its time, with energy saving attributes and proximity to local food sources, parks, and public transportation are qualities you can tout in finding renters or buyers.
Doing research online and talking with people in the know (real estate agents and city planners) will give you some of this information. Signup for newsletters, RSS feeds, and request mailings from real estate companies in areas you’re looking to invest in.
I thought it was interesting to see how companies like Starbucks and Whole Foods did research before opening a store in a new area. They analyze the demographics in a precise manner, looking at salaries of those in the area as well as educational background—how many college grads or master degrees live in this area. I guess well educated means you have money and take care of your self. Incidentally, have you heard about the new expansion that Starbucks is doing, ‘New Starbucks Opens in Rest Room of Existing Starbucks’.
Maybe Starbucks isn't the best example, they want a coffee shop on every other corner. But property near a gym, a park, public transportaion, a bike trail, the freeway, shopping areas, are qualitys that make your property more valuable.
Extra: By the way, the name Starbucks is from Moby Dick, a sailor with a penchant for coffee.