For years it has been common knowledge that location is the number 1, 2, and 3 most important aspect of real estate but what does this really truly mean?
For the investor, what are the three most important aspects of real estate?
The answer to this question may be different to different people. Typically this is where most people will say location, location, location. To a home buyer versus an investor it should have different meanings.
- You want a home within a city or township in which you work (location #1)
- You want a home near those locations you frequent, perhaps shopping, churches, schools, etc. (this is location # 2)
- Next you want the location to be within a nice quiet residential subdivision away from loud traffic and the hassle of the city yet near all the things you like. (location # 3)
As you see location, location, location is basically a bull’s eye where you are narrowing in on your ultimate objective. A great home in a quiet neighborhood that is still in close proximity to all the places you frequently travel to.
For the real estate investor this should have a much different meaning.
Of course if you have your exit strategy in place you should be thinking of the person you will sell this property to in the future so you will indeed want to think like a typical buyer may think and want to consider these 3 location options. However as you do not know the person who will be buying, you will want to be more purposeful. This is where most investors get tripped up.
They miss the 3 most important aspects of real estate investing for investors…
Location # 1: A location that can offer the best most highly sustainable cash flow while renting the property and offering the safest and most sustainable appreciating returns. Notice the emphasis is on safe and sustainable. Find out how and where most people miss this extremely important aspect.
Location # 2: The path of progress. After identifying from location #1, you want to identify within that market where the path of progress is for that market. If the city is growing outward to the north, you too want to invest in the north. Investing in the South end of the city will not give the same accelerated cash flow and appreciation that you will find in the path of progress.
Location # 3: The sweet spot. Above you found the sustainable markets and the path of progress, now narrowing the bulls’ eye even further, you want to find the sweet spot. The properties representing the price point that will yield you maximum cash flow, maximum appreciating potential and be priced based on affordability of the largest number of buyers (typically around or slightly below the median price of the area).
As you can see the purposeful real estate investor has mulch diligence to do. Thinking like the end user is paramount but there is much more involved to being purposeful and finding sustainable investments.
If you want to find out more about how to find the location, location, location sweet spot, give me a call today and we can talk about your real estate investing goals! +1 941-718-7761