How The Right Property Location Can Impact Your Investment Success in 2023
Whenever you go to buy a new investment property, you need to be wary of more than just the specifics of the property itself. In fact, sometimes you need to take a step back and look at the property location and surrounding neighbourhood before you can know that a property is truly going to be a worthwhile investment.
The property location is one of the most important factors in real estate investing and unfortunately many new investors find themselves caught up in the idea of finding the perfect property that they do not take a moment to see the bigger picture.
So, in order to make sure that you are investing in properties that are in the prime property locations to achieve your goals as an investor, let's take a look at how the property location of a property can impact your real estate investments.
However, before we dive in, if you are looking at a potential investment and want to learn more about how lenders may assess the property location, click the link below for a free strategy call today.
“Location, Location, Location”
There is a good reason that this is a common phrase among real estate professionals. The property location is frequently the deciding factor that determines whether you are making a strong investment, or you are wasting money on a property that will cost you more money than it is worth in the long run.
So, whenever you are shopping for a new investment property, scout the property location with the following factors in mind.
Proximity to Local Amenities
When you are buying a rental property, the proximity between the property and important local amenities such as grocery stores, doctors' offices, and schools can play a major role in deciding whether a property is going to be in high demand and receive plenty of rental applications, or if the property will be difficult to market with significantly fewer offers being made.
When looking at the amenities, take a second to consider the types of tenants you want to attract. What sorts of businesses and neighbourhood features would they want to live close to? If you are trying to attract students to inhabit your properties, you may want to buy rentals that are located near college and university campuses or properties that are located on public transit routes. If you are trying to attract seniors and retirees, you may opt for a quieter, more walkable neighbourhood so that they can enjoy their time in peace.
Other key features you may look for is natural space, entertainment and dining venues, and the local businesses and job opportunities.
Discover How To Buy Unlimited Rental Properties With This Step By Step Guide
Planning For the Future
Another important factor when deciding where to buy a property is where you think the neighbourhood is headed in the upcoming years in terms of population. Is the neighbourhood primarily full of families with school children? This may indicate that in a few years the neighbourhood may be full of teenagers or parents who have become empty nesters and may decide to downsize and move. Or perhaps the area is full of retirees and the future of the neighbourhood 10 years down the line is uncertain.
The Impacts of Gentrification
Gentrification is defined as the process of a poor or low-income neighbourhood being changed by the introduction of wealthier residents and investors coming into the neighbourhood. This can result in new businesses opening up and the homes in the neighbourhood undergoing noticeable improvements. This is also met with a noticeable increase in the rate that properties appreciate in the area.
So, if you spot an area beginning to open up new businesses and restore older properties, it is safe to assume that the property values are going to start to rise. If you can identify these property locations early enough, you can easily grab a high-value property for less and wind up with a great deal of equity in a property very quickly.
Geographic Factors
Another driving factor in the reliability and value of an investment property is the geography surrounding the property. Different geographic features can have positive or negative effects on the value of a property as well as your ability to get approved for a mortgage.
One of the most common geographic factors that people idolize and enjoy is a property is a waterfront view. If you are buying a property in a region that has a river, lake, or ocean nearby, properties that allow the residents to enjoy an unobstructed view of the water are often hot ticket items.
However, there are key geographic factors that will also hurt the value of your property. For example, if your waterfront property is also located on a plot of land at risk of severe erosion, the value of the property will take a serious hit.
Another negative geographic factor you need to keep an eye on is whether or not the property is located in a flood zone. Properties located in high-risk flood areas make it harder for you to maintain value in the property, but also can result in high maintenance demand on the property during peak flood seasons.
Property Location Makes an Impact on Your Mortgage
Did you know that the property locations you look at can impact the types of mortgages you can qualify for, and which lenders will be willing to work with you?
Many lenders will not lend against properties located in certain high-risk property locations and as a result you may need to search out a private alternative lending source if a traditional A or B lender is not willing to take on that risk.
One of the most common property locations that lenders will avoid is directly beside a gas station. This is because there is often a high risk of fuel leaking into the soil on the property and polluting the dirt. Even if a lender may consider the option, they will often require a soil sample to be collected so that they know the property is not sitting on contaminated ground.
However, you do not need to worry. At LendCity we work with a wide network of diverse lenders so that regardless of where you are trying to invest, we can help you locate a lender who will get you the best available rate.
So, if you are interested in learning more, or if you are ready to apply, give us a call at LendCity. Our office number is 519-960-0370 or you can apply online today at LendCity.ca. Alternatively, click the link below to book a free strategy call today.