3 Steps to Finding Great Rental Property Locations to Invest In
Looking for good locations to invest in? Check out these real estate investing tips:
Now that you’ve started your real estate investment journey, it may seem like the housing market is overwhelming. How exactly should you decide what will be your first property? The obvious answer seems like the price of the house, right? Wrong.
The single most important factor to having a successful rental property is location. Typically, location is the first thing tenants look for when buying, so that should be the first thing you look at as well. But how exactly do you go about finding a good area?
There are three basic steps you can take to make sure you are buying a property not only in a lucrative area, but also an area that will help you make the most money.
Let’s take a look at this tips that I learned from Robert Kiyosaki:
1. Understand How the Housing Market Works
Learning exactly how the housing market works and being able to analyze its trends will be a huge advantage to you as a real estate investor. While the stock market can be highly unpredictable and difficult to understand, the housing market is much easier to both follow and predict. For instance, if a city or town has seen a lot of growth one year, it makes sense that that growth will continue into the following years.
There are only three ways the housing market can move:
- Up: when an area experiences positive population growth
- Down: when an area experiences negative population growth
- Sideways: when the population in an area remains roughly the same
Obviously, you want to make sure that you are looking for properties in areas that either moving up, or at least going sideways with the possibility of growth. But one thing to keep in mind: sometimes it is a mistake to buy in an area that is overpopulated, because chances are once the population reaches its peak, it will start to trend downward.
Ideally, you want to find an area with potential– meaning people are still actively moving there. You’ll want to avoid areas that already seem like they are “at capacity.”
So, how do you figure out which areas are currently experiencing population booms? Let’s take a look at that next.
2. Follow Population Trends to Find A Lucrative Area
Now that you understand the housing market, let’s put what you’ve learned into practice. Pick an area that you like, and then analyze the current population trends there.
Remember: separate emotions from the deal when looking for rental properties. While of course it’s great to find an area you like, the most important thing is that will be easy and successful for you to rent. This may mean you’ll be buying in an area you’re not a huge fan of, and that’s okay. You aren’t the one living there.
When looking for locations, make sure you are looking at all areas of any particular place. This means looking at cities, towns, and suburbs of both.
Suburbs almost always tend to be trending up in terms of population growth: many cities are overpopulated, and people crave more space and quiet that the suburbs can offer them. While cities are also popular and typically a little pricier than suburbs, suburbs offer a more long-term real estate investment, which is what you’ll want to aim for.
Now that you’ve found a few areas that you like, what’s the final step to narrowing down your choices? It’s actually very simple:
3. Start Close to Home
While you may see a lot of real estate investors that own property in multiple states and maybe even countries, I can guarantee you that they didn’t start that way. The final tip to finding a good area is perhaps the most obvious one- make sure you’re starting close to home.
Let’s say you’ve found a lucrative area three hours away from your primary residence. While it may sound great, you’ll want to take into consideration how much time and money it will take you to get to your property every time you need to visit.
Some established investors have entire property management teams that take care of their maintenance and renting processes, but most likely when you are first starting out you will be a one-person operation. Since that means you will most likely be dealing with maintenance, upkeep, and house showings on your own, you will want to make sure that it is a place that is easily accessible to you and won’t cost you an exorbitant amount of money or take up too much of your time.
Remember: time is money!
Now that we’ve reviewed the three most important things to analyze when looking for your first rental property, go ahead out there and take a look at some areas you like. Just keep in mind when you are looking that you want something that is easily accessible to you and in an area that is currently experiencing a positive population growth.
These two aspects are much more important than price, so location should be the main thing you analyze the most when looking for rental property. A cheap house is great unless it’s in an area where no one wants to live!
Once you’ve found a great deal in a good area, I think we all know what the next step would be. Seal the deal and begin your new career in real estate investing. If you’ve find a good house in a prime location, you will see your hard work pay off very quickly. Happy house hunting!
Charles is the founder of infoSpike.com. He enjoys real estate investing, marketing, and personal finance. Read more about Charles here.