"Location, location, location" is the only mantra of real estate business; why is that? Because nothing gets you a better ROI than the best location. You can find the best locations if you spend enough time researching as well as evaluating the real estate market. Suppose you are willing to do both of the above. In that case, you will easily find a profitable investment property in no time. The location holds a lot of weight because it is the center point of a lot of features that the renters, as well as buyers, look for in a property. The perfect location gets you a better commute, entertainment as well as many other facilities and amenities.
An ideal location is when you are closer to the city, you are also in a secure neighborhood, and your children's school is nearby. What more can you ask from an ideal location. For such locations, the renters, as well as buyers, are willing to pay over the market rate.
No matter how solid your investment strategy is, you can't earn a high ROI if your location isn't up to the mark. The best site will not appear in your dreams; you will need to buckle up and look for it. An as an investor you, will need to organize a thorough market analysis. Your analysis should cover both the city as well as the all elite neighborhoods. If you have already nailed your market, the neighborhood analysis will get you the high paying area; once you have that, you can begin your search for the best investment property.
The market analysis is excellent, but a neighborhood analysis is fundamental, as the overall market can be significant. However, there would still be a few neighborhoods that might not do as high as others. Hence to know about such an area will save you from making a wrong investment decision. Here's how you can evaluate neighborhoods.
Location Surrounded by Amenities:
A little extra never goes amiss. When you have good schools, theaters, restaurants, shops, grocery, malls, parks, gyms, and medical facilities located near your neighborhood or in your community, your location becomes a prime one. Such areas are always on the priority list of families with kids, professionals who commute to work, and bachelor's who are always looking for entertainment. Whether you are thinking to sell or rent your property, your potential customers will line up fast if you have all such amenities surrounding your area. Remote areas are only great for farm or beach houses or even retirement homes or rehab centers. The quality, as well as the number of amenities, is one way of judging the potential of any neighborhood.
If you are targeting professionals and bachelors for your investment property, you will also need to evaluate your chosen neighborhood on the job availability. Employment is also a big factor in determining a house to rent or buy, and potential tenants are always looking for a home that is near the hub of employment. Economically thriving neighborhoods attract a consistent number of job seekers and are hence ideal to buy investment properties.
Crime Rates and Security:
Your prime location will amount to nothing if it isn't secure, so before you invest in a property, make sure that the neighborhood is safe and the crime rate is low. Despite being perfect with all amenities in sight, the demand for a prime location can drop when the crime rate in the said area increases. Especially big families with kids avoid high crime rate areas even if the house's rent and price are affordable. Safe and crime-free neighborhoods are always high in demand despite their high cost as well as higher rent rate.
A quick check on the criminal history of the neighborhood, as well as local law enforcement agencies, will help you evaluate the security of the neighborhood.
"For Rent" And "For Sale" Signs Indicates potential:
Another sign that will help you evaluate any neighborhood better is the number of "For Sale" or "For Rent" signs. If these signs are in ample quantity in any community, it clearly means that the supply exceeds demand in this said area, and you should think about investing here. Too many rental properties or for sale properties means that there is a lot of competition, your investment property might not do so well in this particular area. A desirable area is the one where there are more buyers and fewer sellers.
The biggest concern of parents, as well as professionals and job seekers, are transportation; how accessible is the neighborhood? Evaluate the accessibility of the area, by analyzing the convenience of going to work or school. If the neighborhood is close to major roads and highways, it is an accessible neighborhood worth investing in.
Pride of Ownership:
After evaluating the neighborhood, drive around the area and gauge how you will feel living in this particular area. This evaluation will put you in the shoes of the potential buyer. The personality and pride of ownership in a particular neighborhood also increases its popularity and demand. Aesthetical areas with well-built houses and greenery tend to attract more and better renters.
A neighborhood might not look much today, but with future developments, it will become huge; you should also keep your eye on the bigger picture. So, when you are ready to invest in a neighborhood, don't only see the present features of the area but also keep your eyes open for any future developments like hospitals, better roads, parks, and schools. Apart from making the area elite, future developments will also bring in job vacancies. This will also help you attract better renters and buyers.
If you are new in the business, or if this is your first time buying an investment property, take professional help and gain as much knowledge as you can to better understand the market and area analysis. You can also use many online tools to analyze areas that you have narrowed down to invest.