Location first and foremost – choosing a suitable location for your ne

Whether you’re a seasoned real estate investor with countless successful purchases under your belt, or you’re just looking to buy your first investment property, you’re surely familiar with the catchphrase “Location, location, location”.

The popularity of this saying, coined by Harold Samuel in 1944, serves as a reminder that location is one of the most important factors in determining the value and investment potential of a property and, therefore, one of the main aspects to consider when going house hunting.

A building may tick all the right boxes in terms of square footage, style, layout, expansion potential, or age, but if it’s located in a bad neighborhood, its value will decrease considerably. Much too often, investors buy cheaper houses in unpopular areas in an attempt to save money without realizing they can end up with low or even nonexistent returns. From an investment perspective, it makes a lot more sense to opt for a more expensive property in a sought-after neighborhood if you want to make a profit in the future. However, finding the ideal house in the ideal location is not as easy as it sounds, so it takes a bit of effort and know-how to get things right.

Why location matters

There’s a reason (or more) why the three-times location phrase serves as a mantra for so many real estate investors. Some people focus only on the physical characteristics of a property when evaluating its potential, leaving surroundings out of the picture. This is a huge mistake, as you can’t ignore the fact that a house is generally tied to a plot of land. When you buy a home, you’re not investing in the structure alone but also in the terrain on which it is built. While the structure inevitably depreciates over time, the land does the opposite and increases in value over time, as long as it’s situated in a suitable location.

You can always bring improvements to a property, but you have no control over external factors, which means you can’t do much to improve the neighborhood. The last thing you want is to get stuck with a house that has no chance of appreciating due to it being located in an undesirable neighborhood. That’s why you can have two identical houses with totally different prices just because of their location.

What makes a good location

Needs and preferences vary from one person to the other, so the ideal location can look different for different people. But while there’s no exact recipe in this respect, there are a few aspects that should be on everyone’s radar when choosing a location for their investment property.

The local economy

The purpose of an investment property is to bring in money, so it’s only natural to take economic factors into consideration when evaluating a location’s potential. A city or neighborhood with high growth rates, good infrastructure, well-off residents and prosperous companies is obviously fertile ground for real estate investors.

The state of the local economy can be evaluated by analyzing what’s happening on the business front. Sustainability seems to be a leading trend in business at the moment in many parts of the world. In France, for example, the anti-waste and circular economy law have prompted many companies to adopt a series of measures, like switching to digital or using Mil-tek presse à balles to greenify their operations. So, the presence of flourishing businesses in the area that are actively involved in social and environmental causes is usually a good sign for investors.

Proximity to amenities

Some people dream of living in an isolated place, far away from the hustle and bustle of the big city. However, you shouldn’t base your investment decisions on this small demographic. Buying a property in a remote location or a difficult-to-access area is generally not a good idea because most people search for convenience when looking at a property’s location.

Therefore, you have to make sure the building is located at a close distance to essential facilities and amenities such as commercial spaces, schools, hospitals, social areas, public transport hubs and so on. These factors will make any house much more appealing to prospective buyers or tenants and thus increase the value of your investment.

Property values

The value of the properties in the area is another key indicator of a good location. As a rule of thumb, the higher the property prices, the bigger the investment potential of that specific area. This means that the property demand in the location is on the rise, and people are willing to pay more money to rent or buy a house there.

If you want to make sure your property will appreciate over time, you should check the current prices and the latest trends to get a better idea of how things might evolve in the future. You might also want to take a look at up-and-coming neighborhoods, as this can help you purchase a property for less before the area becomes popular and property prices explode.

Crime rate

Safety should be on your house-hunting checklist as well. All the characteristics that increase the appeal of a property, such as size, appearance, central location, or proximity to amenities, will cease to be attractive if the house is situated in a neighborhood with high crime rates.

No one wants to live in a place where the risk of being robbed or assaulted is ever-present. This will make it difficult for you to find tenants willing to pay the requested price for the house or potential buyers if you want to sell the property later on. Checking crime rates in the area prior to making a decision will save you lots of issues down the road.

As you can see, finding the ideal location for an investment property can feel like searching for the needle in the haystack. So, it’s important to do your research and take all the above-mentioned factors into consideration in order to make the best possible choice.