Real Estate 101

Understanding Your Local Market

Understanding Your Local Real Estate Market

One of the most popular phrases associated with real estate is “location, location, location”.  Location contributes as much to a home’s value as fresh paint and new kitchen countertops.  One of the jobs that a real estate investor has is understanding and identifying the strongest locations in their market.  If you’re just getting started as an investor or currently researching a new market, how can you find the best areas to purchase your next fix-and-flip project or rental property and be confident in your knowledge of the area?  In this blog post we’ll explore four factors you can use to identify strong locations and invest with confidence.

1) Schools

One of the biggest determining factors to whether or not a property is in a good area is the quality of nearby schools.  Great schools are usually a good indicator of a strong housing market.  Families want to send their children to have the best education and are looking to live in the surrounding areas close to those schools.  This is a huge selling point whether you’re flipping a house or looking for tenants to live in your rental property.

2) Employment

Is your market or a market you’re interested in flourishing with new jobs and attracting new businesses?  If so, there’s a good chance that the housing market will correspondingly be strong.  When people are looking for great places to work and live, it helps the housing market and provides great opportunity for real estate investors.

3) Appreciation

Appreciation is another factor to consider when looking at a particular market.  If you are pursuing a buy-and-hold strategy, appreciation is an especially important factor when looking for properties to add to your portfolio.  You want to see a steady increase in value on your long-term investments and when the time comes to sell a property, make a strong profit.

If properties are consistently losing value it’s probably a sign that the market is not very strong nor is it a desirable location for new renters or homebuyers.

4) Crime Rate

Lastly, one of the bigger determining factors of location and home value is crime rate.  Areas with high crime rates are usually red flags for investors and have much lower home values.  Housing websites such as Zillow and Realtor.com have resources that can help you get an understanding of which areas have higher crime rates and which areas are lower.  Lower crime rate usually corresponds in the quality of the three factors above.

Having a good knowledge of your market is essential to finding and purchasing strong investment properties.  Knowing where the best properties are that offer the best value will give you an advantage over your competition.  This will also help you avoid wasting time while you look for your next deal and help you focus on certain areas that you know will provide the best return on investment.  Using these four factors can help you make the right decisions and give you a better understanding of your market or a new market you are looking to invest in.