Personal Development

External Location Factors: Could These Buyer Deterrents Hurt Your Investments?

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I lost a contract yesterday over something I consider absolutely silly. We are just finishing up a new construction property and had listed the property for sale the day before. We figured we would get a lot of traffic on this particular property because it’s located in a hot area with a really good school system. The next day, we get a full price offer — but with a very strange question attached to the offer: “Is this property built on a cemetery?”

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For whatever reason, Google Maps decided that it would display the location of the cemetery right on top of the house we had just built. In reality, the cemetery is about 25 yards away, attached to an old church and clearly not on the same property as our house. However, for this buyer (and probably other buyers as well), the thought of living next door to a cemetery is just too much to handle. The agent contacted us yesterday and informed us that after thinking about it, they were going to terminate the contract.

Interestingly, I had never even considered the cemetery as a potential deterrent or impediment to selling this property. However, there is a apparently a segment of the population that we’ve now lost as potential buyers because of our proximity to this cemetery.

Related: Does Your Location Foster Long Term Tenants?

Unfortunately, I have another new construction property in a different neighborhood with a similar deterrent. This time, however, it’s the proximity to a landfill that’s hurting sales. When I bought the lots, I could see the landfill in the distance, but didn’t think much of it. However, after having built two houses in this neighborhood, we’ve received a good bit of feedback from potential buyers that they just can’t bring themselves to live that close to a landfill.

Ultimately, I know the cemetery house and the remaining landfill house will sell, but not without a little extra holding cost and potentially less margin than anticipated. As an investor, it’s critically important to understand the external factors around a particular property that can hurt (or help) the future sale of that property.

Related: Investment Property Location: Don’t Dismiss the #1 Rule in Real Estate

External Location Factors That Could Hurt Your Investment

Here are just a handful of examples that I think can have a negative effect on sales price and potential buyers:

  •  Property located on a busy road (double yellow, or divided highway)
  •  Property that backs up to a shopping center
  •  Property that backs up to a high crime housing development
  •  Property in close proximity to a busy road or freeway (noise)
  •  Property in close proximity to industrial sites
  •  Property near areas with interesting smells (pastures, chicken houses, water treatment plants, paper mills, stagnant water, landfills, etc.)
  •  Property next to abandoned or dilapidated properties
  •  Property near train tracks
  •  Property located in flood zones

While some of these are obvious deterrents, it’s still important to remember their potential effect on your selling price when considering a property in one of these areas. It’s not to say that you can’t buy a property in an area with a negative external factor; it’s that you need to take it into account when you evaluate the deal and consider your sales price and holding time. Doing so can potentially save you from making a bad investment or at the very least, set your expectations appropriately regarding potential profit.

What about you? What kinds of external factors have you found that have hurt the sale of one of your properties?

Share your stories and tips below!

Ken Corsini is a seasoned real estate investor and business owner based in Woodstock, Georgia. Ken is best known for his role on HGTV’s hit show “Flip or Flop Atlanta,” and has flipped over 800 hou...
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    Pyrrha Rivers Investor from Yokosuka, Japan
    Replied about 6 years ago
    Ken, I’m sorry to hear about your external location challenges. I know first hand that people can have issues about living in close proximity to a cemetery. I live in an apartment in Japan very close to a temple and I have beautiful views all around, including that of a small, very peaceful and beautifully kept cemetery. I see the ocean from two sides, mountain on another, gardens and the temple on another. Friends often comment on the peace and beauty of my view but have negative feelings about my most peaceful neighbors. The landfill I can’t get with because of the smell and in my mind the potential for toxins to enter my property via runoff or even air-born. I do like your outlook and attitude of acceptance, knowing it may take longer and the margins may be slimmer, but your properties will sell. Best wishes.
    Lin Vanderhook Investor from Santa Maria, California
    Replied about 6 years ago
    Knowlege of Feng Shui is very important in selection and enjoyment of your property. It was a must when selling Real Estate in California. Asian and Savy buyers use this method. “Buy Your Home SMARTER with Feng Shui” by Holly Ziegler, is my Bible .
    Angelou Masters Investor from Oakland, California
    Replied about 6 years ago
    I hope you have learned you lesson, Remember location, location, location. I once bought a property in a very hot area unfortunately mine was two blocks from the freeway and like you I never considered that some people would have an issue with this. I still buy houses in not so great areas but I go in with my eyes wide open and I buy them and sale them taking all external considerations aspects into consideration. Also there are certain races that will not buy a property no matter how nice it is if it has a certain number in the address and some won’t buy if someone previously died in the property. Nice article I’m sure you have helped many.
    Sharon Vornholt from Goshen, KY
    Replied about 6 years ago
    Ken – Most folks definitely consider cemeteries a negative. But – there is a buyer for every house so just hang in there. Sharon
    Angelou Masters Investor from Oakland, California
    Replied about 6 years ago
    Sharon that is so true …
    Replied about 6 years ago
    Some folks have problem if the property backs to a Power lines ( I am in that category) as well or a creek. But there are always someone who will ignore this things and will buy. It may take little longer though.
    Scott K. Real Estate Investor from Madison Heights, Michigan
    Replied almost 6 years ago
    you don’t like creeks? People love water on their properties.
    Karen Rittenhouse Flipper/Rehabber from Greensboro, NC
    Replied about 6 years ago
    Properties that are zoned as both commercial and residential. We expected this to double our buyer pool. What we’ve found is that it almost kills it. Thanks for the post!
    Jorge Chang Real Estate Investor from Santa Clara, California
    Replied about 6 years ago
    houses located at the top of a “T” intersection is also considered not favorable for Asian buyers.
    Shaun Reilly Landlord and Rehabber from Newton, Massachusetts
    Replied almost 6 years ago
    Great attitude about the places. You can actually do pretty well with “Locationally Challenged” properties if you realize the issues going in and buy with the right discount. It is nice since so many people will just dismiss these places the competition isn’t tough so you have more power negotiating. I’ve done busy streets, train tracks and even flipped a place across the street from the sewer plant (That was also right by the train tracks and in the slight path of the municipal airport) so there isn’t a much tougher sell than that. 🙂