One of the things that my clients most often ask me is very simple: “How do I spot a good long-term real estate investment?”
While my answer often varies depending on the individual client’s personal situation, there are some things that nearly always indicate a good investment property. Since we have devoted a great deal of time to what does not make a good long-term investment property, now we will spend some time exploring what does generally indicate the potential for good long-term investment.
• Good geographic location
This can mean that the property is located near a desirable spot – for example, a residential property in New York City can be very attractive to a variety of people hoping to live and work in that locale – or it can mean that the property itself brings local benefits, such as being close to a park or being zoned for a particularly attractive school system. Properties near growing economic areas are also generally good buys. If you are not looking for long-term residential properties or multi-unit properties, then the location issue will become more about whether or not the property is in a good location for others to get to, and whether or not that location will be attractive to consumers.
• Low crime rate
You will just be happier – and rest easier – if your long-term real estate investment is in a low crime area. Sounds like a given, but you would be surprised at the people who invest in properties in crime-riddled areas. These properties can be winners in the long run, but unless you are experienced with dealing with these types of areas, then I would generally recommend you avoid them. They can be hard to sell in later, and you can spend a lot of money on costly repairs should your property become the target of a crime.
• Lots of “for sale” signs
In the end, one of the primary goals of a long-term investment is to make serious cash on the back end. One thing that I have noticed stopping a lot of American investors in lots of areas is a plethora of “for sale” signs, which tend to indicate that an area is currently struggling. However, if your other requirements are met, then these properties are worth checking out. You might find a motivated seller willing to let go for pennies on the dollar or even willing to use creative financing to enable you to buy with no money down. Foreign investors in the United States are targeting these areas with great success, and, in most cases – and with caution—, so should we.
Of course, ever investor is unique and different, so never just follow a checklist that was not actually made for you. These items are just suggestions that you should tailor to your own personal situation when you are looking for a good long-term investment.
Peter Vekselman has been successfully investing in real estate since 1996. He has completed over 1200 real estate deals, owned a construction company, been a private lender, and owned a property management company. Peter currently works with clients all over the US helping them achieve riches in real estate investing. For more information please visit www.CoachingByPeter.com.