Investing in real estate isn’t as simple as “buy, flip, sell.” As an investor, the success of your investment venture starts with finding the right property. Whether you’re focusing on single-family homes or larger multi-family properties, you want to make sure the potential for a return on your investment is there. Keep in mind, investing in real estate can be tricky business, and there’s no guaranteed return; however, considering a few of these major factors before moving forward on your investment, will set you up in the right direction.
Location & Neighborhood
In any form of real estate, location is everything. From a residential perspective, single-family or multi-family, where the property is and what surrounds it, matters. Consider this: if you’re investing in a multi-family property, the neighborhood and surrounding areas will determine the tenants your property will attract. As an example, if you have a sizeable multi-family building located near a train station and city area, your property may attract a lot of commuters that are working in a nearby city but living in a more residential area.
Once you’ve decided on the right location, look at what it has to offer. Is there a bustling downtown area with walkable restaurants, shopping, and other attractions? How far is the nearest major city? What are the primary forms of public transportation in the area? The amenities of your investment property’s location will help attract renters.
Look at average statistics of the job market and rent costs in your area. Rental income plays a significant role in your property’s potential ROI, so you need to do the necessary research on average rent costs within the surrounding area. Whatever type of property you choose to invest in, make sure the rent will cover expenses like mortgage payments and taxes. Look into the future of the location as well, especially within job market growth. Areas with increasing opportunities for employment also tend to attract more tenants.
Future Development Initiatives
Information on the future development of an area is typically within the municipal department. Its good to know about the potential for other new housing developments (that could potentially take away from your investment) as well as various other projects that will contribute to the overall growth of the location.