It’s been said a great many times, but it’s still worth repeating the three most important words influencing real estate investment are location, location and location. To an investor, finding the right location is like the search for the Holy Grail. The right location means profit.
When buying an investment house, an investor may have the luxury of selecting a location from a wide area. Here is the breakdown that a wise investor will consider, from the most general to the most specific:
6) Exposure on the street
Of course, you probably won’t have the latitude that an investor has. You’re going to be living in the home, so the most restricting factor is more likely to be job location. Most of us want to be no more than an hour from work, if possible. (In truth, most investors are limited in a similar way taking care of a rental usually means that they shouldn’t be more than an hour’s drive away from the property.
Our likely choices are going to be within a certain county and within probably one or two cities. Now, however, the investor’s path diverges significantly from that of the consumer.
An investor is going to view neighborhoods in a very dispassionate way. In fact, he or she doesn’t really even have to see the neighborhood to make a choice. The investor doesn’t care whether the house is colonial or ranch in design, whether it is on hilly or flat land, whether the area is filled with lovely old trees or has a very modern, stark appeal. What the investor wants to know is resale values. How much have houses in the neighborhood appreciated in the past and how much are they likely to appreciate in the future?
Surprisingly, much of this kind of information is available from boise idaho real estate agents. Today almost all are connected by modem to a central database where they can search for sales by neighborhood, going back six months to a year. Many can go back five years. That’s the most helpful. What an investor wants to know is what the average price appreciation is year by year. Is it 5 percent? If so, the neighborhood’s red hot. Is it2 percent? Don’t buy there.
If it’s a tract home (as the vast majority of houses are), a data search can even tell which model has appreciated the fastest, by sales records. The computer program searching sales also can often tell what the best size of a home is, in terms of resale, as well as the optimum number of bedrooms and baths.
In other words, the investor doesn’t pick neighborhoods by driving down streets and looking to see which are most appealing. Rather, the investor picks them from statistical facts. Even if the investor is brand new in a town, by the time he or she leaves an agent’s office, the investor has a couple of prime neighborhoods in mind, knows the top models, and understands the minimum parameters in terms of bedrooms, baths, and the overall size of the home. (How does that compare with the way you shopped for your last house?)
The investor’s approach is methodical and by the books. What’s important to notice is that personal preference plays no part in it. Never, never does the investor ask, “Do I like this type of house?” or “Will I feel comfortable in this neighborhood?” These questions are irrelevant to the investor.