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The Importance of Location In Your Real Estate Investment Strategy

Aug 17, 2007
Regardless of what real estate investment you have, you'll find that the location of investment real estate matters regardless of the type of investment it falls into. When you first start researching, you'll find that real estate in some locations is in demand and in other areas, nothing is selling and nothing is able to be rented out. The fact is the location is crucial in making your real estate investment strategy a successful one.

Long-Term Investments/Rentals
If the property you are considering purchasing is a rental unit, you will want to make certain the property is in a location that is considered to be desirable. What makes an area desirable? It depends upon the type of property. If it is for commercial use, you will want to make certain the property is located in an area where a certain type of business is more apt to rent. For example, if you have a property that is more suited for retail and it is located five-miles outside of town on a back road, you are less likely to be able to rent the property for its highest and best use. If the property, however, is located on a main street, it makes the property much more desirable.

If it is a housing rental, you will again want to make sure the property is in a desirable location. If you find the property is located next door to a warehouse that works twenty-four/seven, you may find tenants are less likely to stay with all the noise nearby. Housing rentals located in a desirable location should be part of your real estate investment strategy.

Short-Term Investments
Short-term investments can also play a major role in your real estate investment strategy. This would be when you purchase a property and resell just a short time later. This can be a very profitable venture for many and some investors see as much as a $10,000 to $20,000 profit on properties they've invested less than $50,000. However, when you are planning on short-term investments as part of your real estate investment strategy, you must make sure you do the proper research.

Knowing the real estate market in the area is a crucial part of your strategy. The key is to "flip" these properties quickly and if you choose a location where real estate is not selling quickly, you may end up losing money on the deal. By choosing a desirable location, you'll find that properties may be increasing in value rapidly due to the sales volume in the area. This will help you increase your profit when you sell.

As part of your short-term real estate investment strategy, you will also want to make sure you do repairs and renovations as quickly as possible and as cheaply as possible. This will help you to maximize the return on your property as the repairs and renovations will instantly help the property to appreciate in value.

What you will find in your real estate investment strategy is that there are no specific rules to what makes a great investment. There are a lot of factors involved, including the financing details, rental history, and what is currently listed on the market. However, in order to maximize your profits, your real estate investment strategy should include determining whether or not the location is satisfactory and profitable to invest in.
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