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Real Estate - Location, Location, Location

By Brian Kline | June 24, 2015

What does the real estate related term Location, Location, Location mean? It can mean several things but mostly it means that an identical house at three different locations will have three different values.

What Affects Location Values

A few of the elements that vary with location and result in higher prices are:

  • Highest rated school districts.
  • Short commutes to major employers.
  • Nearby outdoor recreations and nature.
  • Economically stable neighborhoods.
  • Low crime rates.
  • Homes with a view - ocean, mountains, golf course, vista, etc.
  • Conforming neighborhoods - never buy the most expensive home in a low income neighborhood.
  • Near entertainment and shopping (a big one with the millennial generation).
  • Near public transportation and medical services.

New Home - Green Pushpin on a Map Background.

On the other hand, there are clearly identifiable characteristics that drive down home values:

  • Adjacent to industrial properties such as gas stations or convenient stores where undesirable people hang out or businesses that generate excessive noise.
  • Other noisy locations such as next to railroad tracks, airports, and freeways.
  • High crime areas.
  • Close to hazards such as power lines, electrical substations, landfills, etc.
  • Some very rural areas.
  • Low income neighborhoods, although some landlords do well in the right low income neighborhood where people maintain their properties (lower working class areas but not gang war zones).

Set Investment Goals

Whether you're new to real estate investing or a seasoned pro, you need to be constantly educating yourself about real estate markets because these are constantly shifting. A solid education also transforms the "good" investor into a "great" investor. Educate yourself about multiple property types and multiple locations. Just because you understand your local neighborhood or a neighborhood that you have already invested in doesn't make that the best place to make your next investment.

Once you have a reliable education, begin making investment goals and a plan to achieve them. Statistics show that those with goals and a plan are significantly more likely to achieve financial independence. Write out your goals and plan so that you can refer back to it often. Among your goals should be how many properties you want to acquire in a specific neighborhood each year. The type of properties you will acquire. The cash flow you expect those properties to generate and the rate of return you expect to achieve.

Begin your location search by looking for the best markets that align with your goals. Too many investors begin their search based on the type of property they want to invest in. Instead, look for economically strong locations based on unemployment, job growth, and population growth. Once you find this, look for the type of property that is selling best at this location. You may need to go back and get a little more education about that type of property. Then start looking at the amenities in the neighborhoods (shopping, schools, etc.). Once you get to this point, it's time to start looking for the best deals. These will be the homes that rent fast and stay rented or the ones that sell the fastest and for the best prices if you are flipping houses.

Please leave a comment if this article was helpful or if you have a question.

BioAuthor bio: Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years. He also draws upon 25 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest in the Olympic Mountains with the Pacific Ocean a couple of miles in the opposite direction.

Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years with articles listed on Yahoo Finance, Benzinga, and uRBN. Brian is a regular contributor at Realty Biz News
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