Location is a very important factor in the decision of where to buy for various reasons. It’s important that the general area has not only a history of healthy appreciation, job growth and stability, but also that the future outcome looks good as well. I like to look at areas around the country that show overall healthy growth including business expansion, population growth, increasing median incomes, and of course current and historical housing appreciation. Although current stagnation of appreciation due to real estate cycles is to be expected and can best be understood by discussing the topic with your local real estate experts.
After selecting a market, it’s important to buy in a localized area that has healthy demand. I consider healthy demand by being able to lease out a rental in less than 30 days during a moderate rental season. These are areas in the market where median income people and families want to live, and they want to stay for 3-5+ years. They are also the areas where people tend to feel safe, relatively speaking. You want to invest in an area where you will be ok visiting with your spouse and kids, during the day, without feeling overly uncomfortable and unsafe. This doesn’t mean you would like living there, it simply means you will not be worried and stressed for your safety while there. If you are living in the market where you want to invest, you probably know of these areas both to avoid, as well as the ones which are more desirable. If not, your local property manager or real estate agent will know these areas off the top of their head. Simply ask, “where do people looking to buy or rent a starter home want to live around here.” This will be a great starting place.
