You’ve heard it before, and you’ll certainly hear it again. But when it comes to real estate, it all comes down to location, location, location. However, there may be a lot of factors affecting these locations that you’re unaware of. According to a recent survey, approximately one-third of all home buyers are first-time purchasers.
Whether you’re selling property, investing in new real estate developments, or looking for your first home, you need to understand what sort of factors can affect the profitability of a location.
The following seven factors can affect the price of your potential dream home and how much money you can make from an investment.
Even though a lot of people are transitioning to work-from-home arrangements recently, people will still want to live close to the action. A recent survey revealed that 37 percent of employed adults feel that prolonged commutes have a negative impact on their leisure time.
Given the opportunity, most people would jump at the chance to live in near commercial hubs. These locations are more accessible to their workplaces and are usually a lot closer to critical amenities such as hospitals. Leisure establishments like shopping malls and the like are also in abundance. However, these properties tend to be ; expensive precisely because of centrality.
2. Crime Rate
No one wants to live in a dangerous neighborhood, especially if you have a family to think about. As expected, people don’t want to rent or buy property in areas that have high crime rates. These areas are often called hot spots, and they have a distinctly negative effect on the profitability of real estate properties.
One study discovered that the farther away from a criminal hot spot your property is, the more its value increases. When looking for new real estate investment opportunity determine if there are nearby criminal hot spots and factor that into your decision making.
Obviously, this factor is more important if you have children of your own or you’re looking for property that caters to families. Which school district your real estate investment is situated in can make or break buyers. Some schools have better reputations and campuses than others and naturally families would want to live in their districts.
Make sure to ask who ever you’re purchasing the property from about this factor if it’s important to your goals. You should also personally check the integrity of these academic institutions yourself just to make sure they’re up to par with your expectations.
Certain areas draw tourists like flies, for exceptionally beautiful natural features like beaches or for popular attractions like resorts and amusement parks. Depending on your intentions for your property, this may or may not be a good thing. If you want to live in your property, swarms of tourists may be off-putting, considering the adverse effects of tourism on locations.
However, tourists are a blessing if you’re buying property with the intention of renting it out. Provided you keep your property attractive and well-maintained, you’ll never run out of potential customers and have a lucrative source of income for years.
5. Natural Disasters
Depending on the location of your property, it may be more prone to natural disasters than you think. This can affect your property’s profitability in many ways.
First, if you’re going to flip the property or rent it out, you may have a difficult time looking for clients willing to live in it. Second, insurance premiums can go up because of the increased risk of damage to the property. Finally, the cost of repairs to the property every time it gets damaged by an earthquake or tornado can be punishing in the long term. Determine how often disasters strike your property location before committing to buying it.
6. Property Taxes
A combination of the above factors can contrive to jack up the property taxes associated with the property. A few circumstances can raise property taxes and not all of them are natural.
For example, communities and cities that are in financial trouble may choose to raise property taxes to help ease them out of their conundrum. High property taxes aren’t always bad. Central locations with great neighborhoods often gave high property taxes. Just be careful to screen for the reasons behind the taxes attached to potential properties.
Finally, be aware if your property is in an “up and coming” neighborhood. The description can often be a prelude to economic boosts, which in turn make your property more desirable. If you buy property before this boom, you can be saving a fortune and securing a profitable investment. You should be very careful, however, to make sure the neighborhood does indeed live up to its promised potential. Keep an eye on economic developments and trends to have an accurate projection.
Always keep these factors in mind when you are considering real estate. Their presence and quality make your potential purchase a profitable investment instead of deadweight.