Location does matter in real estate and the old adage that real estate is all about “location, location, location” may be true, but numbers also count, sometimes as much in the final analysis so both must be considered. In the past year, it has been penned “the last few decades have witnessed a major change in the way investment properties are bought and sold. Creative financing has made it a real cakewalk. There is but one rule that has remained constant and will do so in the years to come. It is the need to nail the right location for your property investments”. What was written then still stands true today as it will be true tomorrow.
Realtors and their brokers are known to often advise their clients their best move is to buy a pretty but somewhat distressed home, even the worst house on the best block in a great neighborhood, a house that may need more than just a mop and glop, but with tender loving care and a solid fix up can become an extraordinary return on investment for a later sale. A great value ad always means solid potential and an easier sale later on at a nice profit. Or better yet, settle on a pretty home that needs no work at all. Just a touch here and there. It goes without saying that if the house locale is sketchy or even war zone scary, to move a house even at a discount or at a decent price relative to your investment, makes any deal problematic if one happens at all. Sound advice for investors, as buyers, as well.
There is a reason the expression “location, location, location” is so often stated. It is unquestionably, the number one rule in real estate. The problem for buyers and investors is they become emotionally attached to the real estate and the moment and forget the other cautionary rule that should be in lockstep with the location, that the deal numbers must make sense. Equally true, you must avoid buying the right house in the wrong location. You may alter its appearance, remodel its structure and modify its layout. However, the house is immovably attached to its location. Therefore, it is absolutely crucial that every investor, every time, should heed this tip: when you invest in a home, always have your end game, your exit strategy, in place to maximize your positioning and your profit. That is why you should have a buyers list and that it is so important to know what buyers want in your market generally and the criteria your buyers want before you make deals with motivated sellers for properties that you may not easily move after you lock and load.
There are several major location characteristics to consider each and every time. For the investor, it is all about that sale to the end buyer and what can be offered at that time.
Safe neighborhoods top every list every time. End buyers must feel safe and will pay more to ensure that. A safe neighborhood with a low to non-existent crime rate, means their family is free to roam about and enjoy their community and their neighborhood to the fullest, with no fear, no trepidation.
Great schools are another. A home located in a great school district for an investor is investor gold if all the numbers work as well. The fact remains: the better the school districts, the better the neighborhoods in that district. End buyers will pay more and those homes will have the higher values. Home buyers with children prioritize education and will pay more for these most desirably located homes.
Having entertainment, shopping, recreation, and medical services close by matters to the end buyer. Homes close to the shopping centers and malls, the trendy boutiques, the best and favored restaurants, theaters, health and medical services and hospitals hold their value and are always the most sought after. Buyers will pay more, all other things being equal, for convenient access.
Pretty houses, pretty neighborhoods, good to great views also matter. Waterfront locales, homes abutting waterways, golf courses, or parks, scenic views with panoramic cityscape, green belt, or waterfront views make for prime real estate.
Another characteristic is access to public transit and highways/freeways. More than the convenient access mentioned above, it is the access to jobs. The airport, the major transportation hubs, even trains and bus stations. Adding a half hour or more to a commute matters, particularly if takes that long just to get to a major transportation hub or freeway and even another half hour or more time from there to get to work.
There is also the consideration of the economic stability of the neighborhood. Choose one that can withstand economic down turns and can hold its value should translate into a profitable long term investment. Job opportunity and growth and a steady employment rate are key ingredients to maintaining an economically stable neighborhood.
One other tip worthy of note is that home buyers choose, when they can, to be in the middle or the center of a street in a preferred neighborhood, rather than a corner or end location, there is often a presumption of safety and better value when they do and those buyers will pay more for such a location.
A brief word about less desirable locations. Good and bad qualities will vary from one community to another. However, there are common characteristics that can lower values and desirability. Too busy a street or traffic pattern, too close to the hospital a fire station, an airport, several mobile home parks, large apartment complexes can make a difference and lower property values. Too close to the community landfill, electric transformer stations, or other community hazards lower values as well.
While it is true that home buying for any investor, location matters, but the numbers do matter as well, Sometimes the numbers just will not work out for the prettiest homes in the best area. Sometimes the numbers just will not work and you need to move on. You can go for the worst house on the best block in a good neighborhood if you are willing to work on it and work for it. The worst house on a sketchier block but in a good neighborhood may be worth the gamble. Shoot for the best or most outstanding house on a lesser block or a sketchier neighborhood, proceed with the utmost caution or just walk away. The numbers must work. Do your due diligence, have your well calculated strike price, your maximum allowable offer, your exit strategies in place, and stick to your numbers based on your resources and game plan.
Location is king but it must be location, location, and numbers because if the numbers do not work for you and for the investment you make, the location, in the final analysis, will not matter or will not matter enough.