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Invest in Real Estate - Where?

By - 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 that.

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.


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