You must look for a neighborhood where house prices are likely to go up in the coming years, or you can get a good rental amount from your homes. You might want to check different location statistics and pending projects, to ensure that you get the best value for investment.
Here is a list of the top 10 tips to find a desirable neighborhood for property investment:
Understand your budget well!
You ought to know your budget well! However, you are likely to overlook this factor during your hectic home-buying process! Try to work with a good broker to pick apart your income. This will help you to know a good deal about liquidity, debt-to-income ratio, and other important points. When the financial details are exposed to you, a broker can help you decide on a realistic down payment. He/she can also help you to look into the purchase price. You will also get a clear idea about the neighborhoods that suit your budget.
When you know your budget, decide what kind of investment you intend to make. Try to answer certain important questions that can help you decide well!
Check the absorption rates
With the help of a real estate website or local broker, you can come to know about the neighborhood’s absorption rate over the past year. The absorption rate represents the pace of the market. In general, it consists of the number of sales and listing inventory. In order to calculate the monthly absorption rate, try to take the total amount of listing inventory in a neighborhood. Then, divide it by the number of sales in the month. The ultimate result will depict whether sales activity in the neighborhood is cooling or heating up. Thus, you will get to know a good deal about the market!
Look for the current neighborhood amenities
Walkability and specific neighborhood amenities need to be looked for. There are some fast-growing cities that have these features. You can invest in such neighborhoods that have such offerings. One important factor for investment should be close access to public transit. It might be a train, bus, or some other form of transport.
You must also check the access to open space. It is a plus if the neighborhood has a local park or a short walk. The neighborhood of your choice should have a good sense of community. It comprises of residential streets, community gardens and commercial corridors. Many affordable neighborhoods do not have well-developed commercial centers. Keep that in check. Look out for grocery stores in case you need them on a regular basis!
Look into the local pricing
You must analyze the current and past pricing in homes around the neighborhood. Go online first. You can find many brokerage aggregation sites online. Gather a genuine price history of properties. Try to look at pricing over the past two or three years. That will be enough. You need to look beyond the average sales prices of neighborhoods. Try to analyze price appreciation for the properties that have been sold in recent times. Look into those properties that are selling over or under ask. Try to check local brokerage firms for market reports.
Do not make your decision on the basis of statistics alone
You are likely to refer to existing crime statistics. However, do not take these statistics too seriously! Keep in mind that crime stats cannot be the only determining factor! Try to ask for local input. You can gather info from existing homeowners, business owners, and brokers. This way you can get a clear picture of the various safety concerns in the neighborhood.
Look into the graph of neighborhood growth
Keep in mind that businesses priced out of one neighborhood are likely to move to the nearest neighborhood. In case you find a particular neighborhood to be too expensive, check nearby areas in the near vicinity that are more affordable. Go for neighborhoods that offer great bets for increasing home values. Get to know the impact of gentrification on the concerned neighborhoods.
Pick up the details! Try to go for in-depth research. Check the reliability of public transit. Keep a check on the neighborhood’s property values in the short-term. Check if the city has any plans to rezone the locality to accommodate new development.
Check the local property tax rates
Even at the time of renting, property tax rates come into play! These usually have a huge influence on your housing costs. In turn, this pretty much affects your overall cost of living. Usually, property taxes are a prominent source of revenue. It pretty much exceeds the local sales and the income taxes, especially if they are levied on the county or municipal level.
Keep in mind that the differences in property taxation between regions can be pretty big. After all, there are large differences in tax rates and home values.
Look into some other cost of living factors
There are many living factors like fuel and transportation costs, healthcare costs, utility rates, food prices, and miscellaneous taxes. All of these are important. Some of these factors are consistent across regions. This pretty much limits the financial benefit of choosing one neighborhood over another within a particular locality.
Study the Area’s Location
The geographical characteristics of the land under your neighborhood can impact your lifestyle. The topography may affect your monthly mortgage or rent payment.
There are certain landscapes that present problems during natural calamities or bad weather conditions like ice, snow, torrential rainstorms. It gets worse if the only routes out of your neighborhood traverse terrain that is subjected to obstacles.
Thus, such bad conditions add time and stress to your overall commute. It might cause a lot of trouble while going to work or school. So, check the location properly.