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Where To Buy an Investment Property

This is an age of question in real estate, where to buy an investment property? When buying an investment property you want to think about what kind of growth is going to take place in the area in the future. What will increase the value of your investment property—and continue to grow and maintain your cash flow from the rent you collect?  What will keep and attract tenants to your rental property - perhaps a college or a thriving and popular area with restaurants and stores. Is it quality schools and a crime free community setting?

When searching for an investment property to purchase as an asset, consider some of these factors listed below.  Seek out property that will grow in value, obviously, but take some of these items into consideration before you decide to buy real estate.

And again, in terms of the finances for your investment, your cash flow for the property really comes down to how much the tenant is going to pay and how much you are paying on your own loan for the property - and then keeping a regular supply of good tenants.

But let's look at some of the key things to look for when buying a property:

  • Selling prices of comparable properties in the area
  • Neighborhood statistics (cost of living/demographics)
  • General market conditions at the time you buy - maybe wait for a slow down if the market is too hot
  • Job market conditions for the area
  • Your financial status and goals
  • Schools in the area - what schools is the property assigned to attend (what's the school district and boundary)
  • What is the teacher to student ratio at nearby schools
  • Future construction in the area
  • Views or property position (could new construction block a view)
  • Location hallmarks (unique and permanent attributes - close to parks, the ocean, or landmarks)
  • Zoning laws
  • Analyze government and community websites to learn about future developments, new businesses to coming into the area, or parks that will be built
  • Schools, libraries, restaurants, shopping, parks with a track or a gym near by (proximity to things that certain types of buyers will desire)
  • Freeway access or public transportation
  • What stores are going to come to the area - maybe a Whole Foods, that would be very good
  • Are there parks nearby or trails for bikers
  • For the overall area, what is the job market like and what companies are positioned in the area

One of the biggest things to think about is what will the area be like in five to ten years.  And, how long do you want to own the property?  This has to do with the type of strategy you're trying to enlist, whether it's an attempt to fix up the property and sell it in a few years or rent out the property for the long term.  With the current market, as of 2008, the real estate market will not rebound for a number of years.  Won't see the huge surge in appreciation like during the early 2000s--the housing bubble and bust.

And there was this from Zillow about buying property near Whole Foods or Trader Joe's:

"Zillow found that homes grow more rapidly in value if they are closer to a Trader Joe's or Whole Foods," the company said in a release.

Between 1997 and 2014, homes near the two grocery chains were consistently worth more than the median U.S. home. By the end of 2014, homes within a mile of either store were worth more than twice as much as the median home in the rest of the country."

Think about the type of tenant you're seeking.  If your target market is students or teachers, maybe you buy property near a college or university.  That way you'll have a built in supply of tenants for your property.  If you're target market is over 55, then you'll need to ensure that the duplex or apartment you're buying is close to cafes, restaurants, and grocery stores--and maybe near a hospital as well.

* When selling a house or property, learn more about the buyer so you can present aspects that they will value. If they work downtown you can explain the ease of using public transportation or the best short cuts to take to avoid traffic when driving.  If they like to run or bike you can show them the bike trails nearby.

Schools, Schools, Schools - almost as important as location, proximity to quality schools are crucial if you're buying a single family home and looking to rent it out to young familes with kids. Sometimes a school will only accept children from a specific local area, and if the address of the property is outside that zone, then the children won't be able to go to that school. So it's a good idea to find out what types of schools are near the property - a high quality school district will make all the difference over the years if you want familes as tenants.

When searching for a single family home to buy as an income property, take a look at Trulia.com's "nearby schools" feature and their rankings - you're able to select high schools, middle schools or elementry schools and see the rankings of schools nearby.



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