How Does Location Factor into Choosing Real Estate Investments?

Does location factor into choosing real estate investment properties? Like everything else, this depends on your business plan.
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Does location factor into choosing real estate investment properties? Like everything else, this depends on your business plan. Knowing your goals will help you determine whether location is an issue and which investments are right for you. Overall, location does matter; for a couple reasons.

Prospecting Phase

If your plan is to spend the least amount of money possible for the highest probable financial gain, you might be most interested in purchasing severely distressed properties. They’re usually available for the best prices. Unless you sell the contract or sell as-is, distressed properties usually require a cash infusion to bring them up to code. If you can do the work yourself, you’ll save money, which adds to your bottom line.

If you’re looking for distressed properties, you’re most likely to find them in older neighborhoods where many of the homes are in some form of distress. In this case, location becomes a critical component of the prospecting phase.

Knowing your goals will help you determine whether location is an issue and which investments are right for you. 

This doesn’t mean you won’t find distressed properties in other areas. The term distressed is broad and can refer to everything from condemned houses to unmaintained properties, or properties that for one reason or another need to be brought up to code.

Rental Properties

If your real estate investments include purchasing and managing rental properties, you would be wise to consider location before you buy. This doesn’t necessarily mean you should only invest in certain areas. But you should do your homework and learn all you can about the neighborhood before you buy so you know who to market to when it’s time to rent.

Some locations will yield higher rental rates; for instance properties near college campuses. For instance, neighborhoods surrounding college campuses are sound investments because they will likely be perpetually rentable. Oftentimes, they are so much in demand that landlords keep waiting lists with names of students wanting to move in.

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