Location is the key to every successful real estate investment and as an investor begins the search for land or property, the first thing to do is check the area in that specific housing market. Finding the ideal location will help maximize profits and give you a better understanding of what to look for and how to determine a “hot spot” for your investment today, generating wealth for your future.
1. Identify the “hot spot”. Finding the best location for your parcel is your primary concern. Investors want a land or property that will continue to make them money over the years, but it’s a matter of knowing where exactly that location is hot now and in the future. Identify these locations by justifying the price with your requirements, determining the land quality and availability through strategic research.
2. Justify the price. When searching for the best land or property, create an expense list of how much your investment will cost over the month, year and next ten years. Include HOA fees, property taxes, utilities, etc., and of course purchasing price, mortgage and how much you will be renting the property. If your numbers add up and the cash flow is in the positive then, you’re looking at a good location to invest.
3. Determine the Topography. Save yourself money and time by asking these questions: Is the land flat? Is there a downhill/uphill slope? Does anything need to be removed from the lot to clear space for building (i.e. trees, buildings, etc.)? Will the landscaping need a watering system? Is there a gravel or cement driveway? If the land you want is in a town find out if it already offers power/utilities or if you’re looking in the country, find out what additional costs (water lines, electricity, etc.) you need to consider.
Be sure to keep in mind these prices when choosing the right location so you’re not surprised when construction takes longer or an expense to remove a tree is thrown your way.
4. Do Your Homework. Research a variety of lands, neighborhoods and general areas that will do well for your investment. Find out which locations have already done well in the past and which are projected to expand in the future. Is there a residential community coming soon or will this neighborhood turn into a commercial property in the future? Are there schools close by, shopping centers or freeway access? Find out these answers for the investment now and the demand ten years down the road. The more you know now, the better your investment will be in the future.
Now, go out and find that perfect location for your next investment.
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photo credit: MarkMoz12 via Pall Spera Company Realtors
