When it comes to investing, buying real estate is one of the best decisions you can make. The real estate market is healthy and has seen excellent growth in recent years. Many would say there has never been a better time to invest in real estate than right now. That said, not every real estate move is without risks, and the market can fluctuate on a fairly consistent basis. So before you dive in, we’ll tell you what to look for when considering investing in a property so you can make a good move and have the best chance for high return on investment.
1. Study the Local Trends
National trends are important to consider, but even more critical are local trends. Study them inside and out. Scour the internet. See what top investors are saying. Check out sites like Zillow and Trulia. Even check the newspaper or speak with a real estate agent. What does the market look like in the neighborhood in which you’ll be purchasing a property? Have homes appreciated in value in the last few years, or depreciated? How quickly is the price of homes accelerating? Asking these questions will help you determine a location to focus on when looking to buy a property.
2. Look for Signs of Growth
There are some tell-tale signs that a community is expanding economically, and if you catch them early, you could hit it big in the real estate department. Are new schools being built? What about roads, restaurants, and shopping centers? Any of these could mean that a boom in the local housing market is brewing. Keep an eye out for newly developed properties as well.
3. Keep Taxes in Mind
Property taxes can vary by community. The lower the property tax, the higher the demand for homes in that area. Remember that reassessment of taxes can also occur periodically, typically causing property tax to go up. Real estate agents are your best friend here as they can likely tell you the last time a given area was assessed and help you make a good investment accordingly. While growth is good in a budding community, be wary of older towns that are becoming overcrowded as it could mean a spike in taxes.
4. Check the Quality of Schools
Just as you are looking to invest in real estate, parents are looking to invest in the future of their children. They’re on the lookout for top-notch schools that can provide a quality education and give their kids the best chance at a prosperous life in the future. As such, they’ll be looking for homes in areas surrounding the highest-performing schools. If you want to invest in real estate, find a list of the top schools and look for open properties around them.
5. Consider Local Transportation
Though the inner-city may be crowded and offer few or little available properties, there are often lots and homes available outside of the main hustle and bustle. Contact the local transit authorities to see if they have plans to expand their reach. If they plan to add a new bus or train stop, consider looking for homes around that area. If you plan ahead, you can get a jump on acquiring prime locations before others do.
6. Invest in a Different Way
Investing in real estate may be a big undertaking if you aren’t an experienced investor. Luckily, there are automated investing tools out there that use advanced algorithms to help you make the smartest investments that will offer the greatest returns. So if extensive research into the real estate market isn’t at the top of your to-do list right now, there’s no shame in using automated investing software. Simply decide your goals and how much money you want to allot, and the handy investment tools will take care of the rest.
Some Parting Advice
Though you can take a look at what has been happening in the real estate market and try to determine where things will go in the future, you will never know perfectly what the market will look like a year or even a month from now. Thus, constant study is important. However, keeping the tips we’ve laid out in mind will have you well on your way to making a solid real estate investment.
Guest Author Bio:
Kevin Faber has been in the commercial finance and banking industry for most of his professional life. He graduated at UC Davis with a B.A. in Business/Managerial Economics. His experience in credit analysis, finance, and management led him to be the founder of Silver Summit Capital. He enjoys working in the financing industry and building connections with industry leaders.