It’s often been said that the three most important points about real estate investing are 1) location 2) location and 3) location. And this has never been more true than in single-family home investing. The success or failure of your investment – more than any other item – is based on exactly where the home is sited and what the future is of that market. So how can you do a superior job of choosing the right location?
It’s the location that creates value, not the sticks and bricks
Let’s first hammer home, one more time, that the value of a single-family home is not the sum of its wood, drywall, bricks and concrete. It’s the fact that it offers residency in that one certain location. A 2,000 square foot home in rural Missouri is worth maybe $100,000, but that same home in Los Angeles is over $2 million. So when you are investing in single-family homes, you are really investing in location.
It’s all available on-line
Another issue to discuss on the front-end is that almost all of the information you need to do a superior study of the location of a home is available 24/7 on-line and at no charge.
- net . This website gives you all the statistical information you need, including population, median home price, average apartment rents, vacant housing, market demographics, metro stats – essentially everything known without limitation. You can also then compare the zip code of the home to the stats of the metro market, to see if you are the nice part or the bad part of the housing market.
- com. This site allows you to see the value of all single-family homes in the market, as well as a snapshot of how many homes are for sale and how many homes are in repossession. It not only gives you pricing, but also the number of bedrooms/bathrooms and other granular data.
- com. This amazing website allows you to see where the home is in the surrounding neighborhood, as well as distance from shopping and other items. It also gives you access to Street View which will allow you to see not only the home but the entire rest of the neighborhood just as though you were there in your car.
- com. To prevent your investment from being in a market that has future peril in employment, you can go to this site to see the history of the city and often a breakdown of its top employers.
Follow the money and population trends
Once you’re found the information, it’s important to focus on the most important attributes of success. You want to be in a location that has large population, population growth, high home and apartment prices and low vacant housing rates. It will be immediately obvious if your location is desirable or not. You will get an immediate gut feeling once you see the stats.
Be the worst home in the best neighborhood, not vice-versa
As a general rule, you never want to buy the most expensive home in the neighborhood. Instead you want to own the worst home in the best neighborhood. When the neighboring homes cost $250,000 and your costs $150,000, it gives the customer a much greater feeling of value, and leverages the location as being value as it gets you in the “club” at only a fraction of the normal “membership fee”.
You can be a success in single-family home investing as long as you focus on only putting your money into successful markets. Follow these rules to get a better assessment of your location, location, location.