The Role of Location in Real Estate Investing

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Location is one of the major characteristics to take into account when you are real estate investing ! In this article, I will Explain How Rental can be used to determine the Value of A Property and What It Means for Investors !

 

What is the importance of location in real estate investment?

The choice of location is essential in real estate investment. You should know that the price of real estate, but also its quality and its rental potential depend on several criteria.

You will have to favor the location of the accommodation according to the needs that are yours. For a rental investment, it is important to consider the local real estate market before making a decision. The objective is to have an economical attractive housing, in terms of market price and in terms of technical characteristics.

The profitability of a rental investment is often linked to the quality of the property: presence of green spaces, proximity to public transport or accessibility to shops. But that is not always enough to make a good real estate investment! In some cases, it may be interesting for you to invest in a general area rather than a specific area in order to diversify your assets and therefore your risk.

 

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What are the criteria to be taken into account when looking for a building to invest?

Before you embark on a real estate search for rent, it is important to take into account the following criteria: – Location of the accommodation: To choose an ideal location for your rental investment, you will have to take into account the needs and expectations of population.

You will also need to check that the neighborhood meets the needs of future tenants. For example, if your goal is to rent an apartment in Paris, it will be more judicious to opt for a central district where the inhabitants go mainly on foot rather than in a residential area which requires the use of a personal vehicle. – The location of the property: in order to optimize the profitability of your rental investment, it is important to take into account the location of the property (quiet or lively area). Indeed, if the accommodation is located in the city center and therefore in great demand by the inhabitants, its prices will only increase.

It will then be difficult to offer an interesting rate in terms of rent. It will then be necessary to favor a property located near public transport or even near shops. The average price per m² can vary between € 4,500 and € 7,200 depending on the location of the accommodation.

 

What is the best way to verify the profitability of a real estate investment based on location?

Location is a fundamental factor in determining the profitability of real estate. To verify the profitability of a real estate investment, it is necessary to take into account three fundamental elements: the price of the real estate market in the district concerned, the request for rental compared to the available offer, the general location of the property. Regarding the market price per square meter, it is important to know the average cost of real estate in your geographic area. For example, if you want to buy a property near a university or in a residential area and the neighborhood houses have prices similar to them, these parameters can play in your favor. Otherwise, cheaper properties can be more interesting. If you want to get a high return on your rental real estate investment, make sure that the location meets the needs of potential tenants and that it is easily accessible by different modes of transport.

 

What are the advantages and disadvantages of investing in buildings located in high -growing cities?

If you wish to invest in a building for professional use, it is important to take into account the advantages and disadvantages that this operation presents.

The advantages of real estate investment for your business? A building can represent a significant value for your business. This improves the visibility of your brand and therefore its notoriety.

You can also improve the comfort of employees by offering them a space where they can work in good conditions. Well located premises can attract potential customers, which is always positive for your business.

Real estate investment can be an excellent way to diversify your portfolio, because it is not very sensitive to market fluctuations. Real estate investment is often associated with tax advantages, which can be an important asset for investors who wish to reduce their taxation. To invest in a building, several possibilities are available to you: buy the building in full or in pieces (called “cutting”).

 

What advice would you give to a beginner real estate investor?

Do you have a real estate investment project and are you looking for advice? This article is made for you ! Here are some real estate investment tips for people who wish to embark on rental investment.

Your investment must be thoughtful, because it is important that you take the time to select your property in order to limit the risks. Choosing a strategic location, that is to say an area where the real estate market is dynamic and healthy.

When you buy a property, several factors must be taken into account such as its current state, any work to be expected or its general location. Indeed, it can be wise to buy a good located in the city center in a shopping street, but which requires important work before its rental. It will then be more difficult to generate interesting rental income.

Check local real estate market prices before the sale of the property. If this price is significantly higher than the local market prices, you can either resell the property at a loss or accept a price lower than that estimated by professionals (real estate agencies) in order to take advantage of them quickly or in the long term if it corresponds To your personal project and that the location of the accommodation is perfectly suited to your financial and family situation.

 

What are the risks linked to real estate investment focused on location?

To invest in real estate, it is important to know the risks associated with it.

You should know that any real estate investment has risks. The latter can be linked to fluctuations in the real estate market or the fluctuation of prices in the event of real estate resale.

Financial risks can also occur in the event of a tenant’s defect, which can lead to a loss of capital.

The risks linked to real estate investment focused on location are different depending on the type of investment made (purchase of new or old property). In addition, it is important to note that investing in a property located in an attractive geographical area implies several risks: – The price of the property will be higher than that of the goods located in less attractive areas; – rental demand will be less than on the outskirts; – the location of the property is not always adapted to professional use; – the tax system is often more advantageous for French residents than for non-residents (temporary or total exemption); – When you sell your property, the taxation will sometimes be much higher than that applicable if you were remain owner in previous years; – Your heritage must be sufficiently diversified in order to limit the potential impact of market fluctuations and/or to alleviate the potential harmful effects linked to the volatility.

With the advent of the Internet, real estate rental has experienced explosive growth. The owners are more and more numerous to rent their house or apartment while they are absent. This trend is particularly strong in the United States and the United Kingdom.

 

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