How to decide the Right Location for Property Investment
When asked, most real estate experts believe that the venue, venue, and place are the three most important factors that will decide the success of your real estate investment.
Your rental property’s position can have a major impact on its results, and will determine:
- The property's ability to increase in value.
- The seasonality of the property you rent.
- The tenants you should be selling your property for.
- The appropriate rate of return for the property based on an analysis of the comparative market.
The Seasonality of the Location
Depending on the location in which you invest, the output of your rental property will differ significantly from season to season, which is something you should certainly remember when planning your investment.
For instance, if you're investing in a summer vacation rental, you can expect your property's peak output to occur during the summer season, so it wouldn't make sense to boost the rental rate during the winter.
This is a location factor that you should always remember during your investment planning process. The location's seasonality, for example, is one of the main factors you should remember when trying to assess your rental income.
Other examples of seasonality include areas such as university towns. Rental properties in college towns will usually have a much higher vacancy rate during the summer season as students return to or move to their hometowns.
See Also: How to decide quality of building construction
The Target Tenants
The property’s position will also decide the kind of tenants you'll want to draw to the house.
For example, if you invest in a college town rental property then selling your property to married couples or families may not make sense. Instead, your best option might be to market your property as a dorm for college students, or as a residence for the college staff and teachers.
When learning how to choose the right location for the property, you should always consider your target tenants and the location’s demographics, and whether this is the right type of tenants for you and your business.
Centrality
Wherever you want to live within a town or city, it will definitely affect how much you pay for your house. Land is a limited asset, meaning that highly developed cities like San Francisco, with little space for more expansion, appear to have higher prices than cities with too much room to expand.Some of these communities have a large number of homes that are uninhabited and areas that have fallen into disrepair.
Neighbourhood
The quarters that appeal to you will be primarily a matter of personal preference. A very nice neighbourhood would however have some main factors in common: accessibility; appearance; and amenities. The size of the lot on which your home is constructed can also be determined by your neighbourhood.
With regard to accessibility, you can look for a neighbourhood that is located near the major transit routes of a city and that has more than one entry point. Commuting to and from work is a major part of the day of many people, so it would be more convenient to have a house with easy access to roads and/or public transport than one that is hidden away and can only be reached by a single street.
Development
What matters are not just the current facilities but also potential ones? Plans for new schools, hospitals, public transit, and other local amenities will significantly boost the values of the area’s assets. Commercial construction can also increase real estate values. Try to find out whether any new public, commercial or residential developments are planned when shopping for a house, and consider how these changes may affect the desirability of surrounding areas.
Lot Location
You will need to remember where the house really is situated. There are a few things that you should bear in mind in this instance as you perform your quest. If the house you want to buy is right on a busy road or very near to a highway, you can probably get it for a lower price, but it will also be more difficult to sell later on. The same may extend to houses next to or back to commercial land, such as a grocery store or gas station, or street houses that receive an extraordinary amount of parking traffic and parked cars, such as those near large churches or community centres.