You have the funds but are unsure where to invest in your first rental property?
The ancient wisdom of the golden rule—location, location, location—is familiar to every real estate investor and continues to be a key consideration before committing important resources to any project.
I've been investing in real estate since 2004, and I can attest that the importance of this rule hasn't decreased.
Whether the investment is for a long-term or mid-term rental, a thorough evaluation of specific information is required for each property under consideration. In my investment initiatives, I continually prioritize studying the following factors to achieve a thorough understanding of the property's potential and connection with my investment goals.
The cliché "location, location, location" is extremely important in real estate, especially when purchasing houses for rental investment. The location of a property has a significant impact on its value, demand, and prospective profits. Based on the golden rule of location, here are some critical considerations and advice to influence your property investment decisions:
Some factors that you should look into
Economic Growth and Job Market
Focus on places with a strong and rising economy because they are likely to attract more tenants.
Look for areas with a broad economy and a strong job market, as these factors might contribute to sustained rental demand.
Chamber of Commerce websites offer excellent insights. Please refer to this excerpt from Austin Chamber of Commerce: Per Capita GDP
“Austin’s real GDP on a per capita basis performed well relative to other large metros over 2016-2021 and 2020-2021. Austin ranks 11th, with 8.0% growth in real per capita GDP in 2021, while the gain across all metros was 6.1%. Dallas-Ft. Worth’s increase was 5.6% (ranking 29th), San Antonio’s was 4.5%(44th), and Houston’s was 0.9% (49th). Five metros had double digit growth, led by San Jose with a 15.8% increase in real per capita GDP in 2021.”
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Safety and Security:
Select areas with low crime rates and a good reputation for safety. This aspect has a considerable impact on the desirability of a rental property.
Before making a decision, look at the neighborhood's crime statistics and community safety efforts. A reputable source for this research is City-data.com
Source: https://www.city-data.com
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School District Quality:
Properties in neighborhoods with good school districts frequently attract families, resulting in more stable and long-term rental demand.
Examine the quality of nearby schools, as this might have an impact on the property's market value and appeal to tenants.
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I personally like to invest in B class neighborhoods with excellent school ratings.
In Austin for instance, I like Round Rock Independent School District and Leander Independent School District. A great resource for investigating school ratings is GreatSchools.org.
Infrastructure and transportation
Assess the use and quality of transportation infrastructure, such as highways, public transportation, and airports.
Properties near major transit lines may be more convenient for tenants and may be in higher demand.
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Other factors that you should look into
Property Appreciation and Market Trends
Keep up to date on market trends and future development plans that may have an impact on the property's value.
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Considerations Regarding Demographics
Understand the demographics of the area and look for rental properties that would appeal to the locals. Urban regions, for example, may attract young professionals, whilst suburban places may be good for families.
Zoning and Local Regulations
Some regions may have short-term rental limitations or particular zoning requirements.
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Plans for Future Development
Look into any upcoming developments or infrastructure projects in the region. Future expansion has the potential to boost property values and rental demand.
My goal is to build strong and real estate portfolio. My strategy not only optimizes possible profits on investing but also reduces risks connected with market volatility.
I invest in my MTRs like I do my LTRs by selectively picking houses in B Class locations that have great schools, are close to respected and large employers like tech companies and major hospitals, and have access to a wide network of roads.
My approach to real estate investing is essentially a commitment to the age-old ideas of the golden rule, with a focus on location as a key factor in maximizing the potential of any real estate investment.
I hope this helps, or at the very least reminds you of the golden rule before you make your next rental investment. Cheers!
