How Significant is Location, to Real Estate Investments?

Real estate experts will tell you location is the number one consideration in real estate investing. But why is location so important?

Location, location, location. Who has had a real estate conversation without hearing those three words? Indeed, there are many other factors to consider when investing in real estate state, such as the house, size, and price come to mind. But somehow, everything goes back to the location.

So, let's look at the reasons why location is so crucial for the success of what might be the most expensive investments you will ever make:

Location determines desirability:

When you are buying or renting a house, some aspects attract you to a particular location. Proximity to public transport, roads, amenities, public services, and shopping areas, to name a few. People also look at security and space to park their cars or walk their dogs.

This is exactly what you should think about when investing in a property for sale or rental. Is the location safe, clean, near roads, and shopping areas? Are there good schools, hospitals, and restaurants nearby?

Location determines your business strategy:

There are many things you can do with your investment to get a good return. One of the major factors to consider when deciding on the best strategy is location. If your property is located in a place with high rental demand, the best strategy would be to lease it out. On the other hand, if it lies in a tourist destination, Airbnb and vacation homes sound like good strategies.

Better still, if you were lucky enough to acquire property in a timeless location where people dream of living, you can upgrade the property and sell it at a profit. If you decide to invest in opportunity zone real estate, location will determine the balance between enriching the struggling community and making profits.

Location determines your returns:

Your primary goal when investing in real estate is good returns. You must therefore choose a location that guarantees a maximum return on your investment. This means a place that fetches high rental income or resale value. For example, areas close to roads, cities, public services, and green areas tend to cost more than those in the interior. Some areas also tend to appreciate much faster and steadily than others because of perception.

Location is invariable:

One could argue the house's size, its aesthetic state, and other factors are more important than location. However, you can renovate the home, make it bigger, furnish it, and even improve the surrounding. What you can't change is the location, if it turns out to be unsafe, noisy, and dusty.

Consider Future Developments:

Part of making smart investment decisions is foreseeing the future as much as you can. Do your due diligence to determine where that particular location will be in a few years.

For instance, the construction of a road or a shopping center can turn an otherwise quiet and peaceful area into a noisy, unsafe location in a few years. Similarly, a place that in undeveloped for now can turn into a coveted suburb soon.

In this second scenario, having some inside information about the plans in that area will enable you to buy cheap and sell at a considerable profit in a few years.

Also, Read: What determines success in Real Estate Investments?