Invest in Real Estate - Where?
By Steve Gillman - 2005
Where to invest in real estate? When you know an area and
have enough experience investing in real estate, you can make
money almost anywhere. Of course, there are always places that
are better or worse for real estate investments - places that
have a better or worse demand/supply ratio. Try using the questions
below to find them.
Real Estate Demand Questions
1. Is population growing fast? You can check the US Census
figures online, or ask the local government if they have the
statistics. Avoid areas that have little growth.
2. Is there decent job growth? Ask local authorities or use
the census information. Job growth should be equal to or exceed
population growth. People have to have money to pay for housing.
3. Is there a decent quality of life? This is subjective,
of course, but important. Are there theaters, parks, and bookstores?
Count coffee shops, vegetarian restaurants and cafes. Trendy
areas will usually have increasing demand for housing. Another
good indication of a high quality-of-life is when people are
willing to take lower-paying jobs just to live there. Ask about
4. Is there wealth in the area? It's always a good sign when
there is wealth in a town. Count the expensive homes. Wealth
means all the jobs don't disappear when the economy slows. (At
least the service jobs.)
Real Estate Supply Questions
1. Is there much new construction? The census figures will
show you what's happened over the last ten years. Check with
local authorities to see if the the number of housing units they've
issued building permits for recently is more or less than the
expected population growth.
2. How many homes are for sale? A lower supply of homes for
sale means upward pressure on prices, which indirectly drives
up rents as well. This makes for better investing.
3. What are the rent and vacancy levels? Does the level of
rents justify investing? Are vacancies low or high? When we first
visited Tucson, every building had vacancies. We saw a man holding
a sign that read, "Apartment - $250 Per Month." A great
place for renters, but not to invest in real estate.
4. How much available land that is buildable? Less land is
better for future appreciation. When cheap and easy land runs
out, the prices start accelerating upwards.
Ask and get answers to these questions to compare various
towns and cities, and you'll start to see the differences more
clearly. Then in each town, you'll see how housing demand compares
to supply. Finally, you'll find out where it 's better to invest
in real estate.