Blog Investing What Is Location in Real Estate Investing?
what-is-location
Find the best places to invest

What Is Location in Real Estate Investing?

 

Let’s play a quick game of Jeopardy. Description: The most important aspect of real estate. If you’ve answered “What is location?”, then you’re in for some great gains in the form of rental income.

Location, location, location. You’ve heard it all before. Location is the most important thing to look for in a rental property. Location is so important that it’s better to purchase a bad investment property in a good location than to buy a good property in a bad location. Yup, location is THAT important.

Related: 6 Reasons Why Income Property Location is So Important in Real Estate Investing

But what is location that is suitable for real estate investing? Here are the factors that impact a location and a property’s success in that location:

  • Safety

As the saying goes, “Safety first”. Every tenant wants to live in an area where he/she feels safe. This is true for both long-term tenants and short-term ones through Airbnb. To get a sense of an area’s safety, check its crime statistics. Don’t purchase a property in a crime-infested area.

Crime isn’t the only thing that impacts safety; natural disasters do as well. If the property is in an area prone to natural disasters, be sure to get some insurance.

You could always take extra security measures for a property. Consider having the property gated. Security camera also never hurt.

  • Schools and Colleges

It’s always a great idea to have an income property in a good school district. If your tenants have kids, this will probably be the main reason they move into your property. Heck, even tenants without children would like to live in a school district. That’s because school districts tend to be very safe.

College towns are also a great place to buy an investment property. They provide consistent rent and constant demand through the year. Whether you opt for a property in a school district or a college town, you’re in for an additional benefit: appreciation. These areas have high value increases, and so will your properties there.

Related: The Guide to Renting to College Students

  • Job Market

What is location without a good job market? Not a whole lot, frankly. For the majority of tenants, living near their workplace is of utmost importance. Having a rental property in an area with great job opportunities will garner consistent demand. Finding a property in a well-established area with a job market can be difficult. Instead, try to scour for places with nascent companies and factories. That way you can establish your property early in the community. To find out how an area fares in terms of the job market, check of the U.S. Bureau of Labor Statistics.

  • Rental Income

Location impacts your potential rental income, directly and indirectly. What is location in relation to rental income? A location’s housing market and rental market will influence a property’s rent. If properties similar to yours are renting for a certain price, you will have to rent in a similar price range. Buying a rental property in an area with a strong rental market will mean higher rent. To compare properties in an area like yours, be sure to use Mashvisor’s rental comps.

Related: Finding and Understanding Rental Comps Made Easy

  • Scenery

Never underestimate a property with great scenery. It may sound slightly insignificant, but tenants really search for views when looking for rentals. Properties with great nature views, like ponds, hills, and oceans, have an advantage. Rentals with views of city landscapes are also at an advantage. When searching for a property ask yourself, what is location scenery like there?

  • Property Taxes

Property taxes are different for different areas. This is something you need to take into account. Normally, some aspects of taxes are seen as beneficial to real estate investors. Take deducting expenses on tax forms as an example. However, property taxes can be high in some areas. This is fine if the area is great. If the location is subpar, however, and it has high property taxes, you may want to reconsider investing there. Make sure your calculations (which you can do with Mashvisor!) show that you will receive positive cash flow with a property. When renting in an unfamiliar area ask what is location property tax like there. Here’s the 2017 property taxes for the US States.

  • Legality

Legal issues are extremely important when investing in real estate. These laws, of course, will differ from one location to another. For instance, some areas have laws which limit or ban renting a room of your house.

Perhaps nowhere is location law more important than for Airbnb users. Some cities have little legal issues, some have too many. Always review Airbnb’s official site for recent updates on changes in local laws. Bottom line, always know what is location law like in an area.

  • Commercial Districts

Proximity to commercial districts will be very important for a property. A lot of tenants prefer to be near, but not in the middle of, commercial districts. Being near shopping centers, restaurants, movie theaters, and other facilities of entertainment and convenience will give a property more demand. If you are renting through Airbnb, try to have the rental near popular tourist destinations.

  • Public Transportation

There several subtle aspects to what is location appropriate for real estate, like scenery. Access to public transportation is one of them, but more important than scenery. Living in a property near public transportation is just as important as living in an area with a good job market for tenants.

What is location in real estate? Well, it’s a lot of things, as covered in this blog. Overall, it’s one of the most important factors that will determine the success of your property. There are a lot of aspects of rentals that can be corrected over time. Location is not one of them, which is probably why it is so important. Location, for the most part, is constant. Therefore, double and triple check everything about an area before investing in real estate in it.

To learn about what is location in real estate and more, head over to the Mashvisor blog. To find properties in profitable locations, start your trial with Mashvisor.

Start Your Investment Property Search!
Start Your Investment Property Search!
Start Your Investment Property Search! START FREE TRIAL
Hamza Abdul-Samad

Hamza is a long-time writer at Mashvisor. With a focus on real estate investing tips, concepts, and top investing locations, he aims to help all aspiring investors who come across his blogs to hit the bank with their investment property.

Related posts

Rental Rate Calculator: Find Out How Much to Charge for Rent

19 Different Real Estate Careers: Which One Is Right for You?

In the Spotlight: Property Score Filter, Email Alerts & More