How To Decide Where To Invest

Source: Forbes

Real Estate and Rental trends are always changing making it challenging to determine where to invest. Not only has the real estate market been almost too hot to touch the past year but there has been more people moving out of larger cities into smaller towns or suburbs. Like New York City saw 56% of residents move away from the city in 2021.

College towns and single-family homes both have their pros and cons. Understanding the type of tenant you want to rent too is another consideration. College towns have an influx of renters constantly, stable rent prices but property appreciation at the same time, usually parents co-sign giving a constant cash flow. The downside to investing in a college town is the tenant turnover rate is a lot higher due to off-season during school.

As for single-family homes you’ll most likely be left with longer term tenants. Homes that are well maintained tend to hold their resale value better. Compared to apartment buildings or multi-family homes a detached single-family home can have lower property taxes. These can cost less to manage since there aren’t as many tenants moving in and out there will be less repairs.

When looking for new investments you may run across urban and suburban property locations. When investing in an urban area you have a constant influx of renters, attractive amenities, shorter vacancies, potential tax breaks for historic properties (The Rehabilitation Tax Credit). The downside can be a higher crime rate, and hard to find parking.

Investing in the suburb or single-family home areas usually gives lower tenant turnover, a more affordable market, less wear and tear, lower crime rates, and more family friendly locations. There is less risk involved and higher quality tenants in these areas. Many are located near good schools which is what tenants look for.

Locations with good job growth opportunities attract new tenants as well. Areas with large companies moving to the area give signs workers will flock there. Although that doesn’t tell if the home value will increase or decrease the number of tenants looking for a place to rent will increase. Ocala Fl is a great example of this due to large companies like Amazon, FedEx, AutoZone, Chewy moving in and creating thousands of jobs.

A good combination of goals and the understanding of the positives and negatives of investing in certain areas will help produce a higher ROI wherever you buy. Thanks to property management companies we make it possible to invest in real estate anywhere.

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