With property prices in the US believed on the way to a six percent rise this year, it’s clear to see why many people consider real estate to be the ultimate asset class for their investment cash. While there’s no certainty when it comes to investment, the property market does tend to even itself out over the long term – so it definitely appeals from a security perspective.
Choosing a location in which to buy wisely is crucial. Picking somewhere that ends up seeing a decline in value can affect you in the short term, while you’ll also need to work out how your financing plans fit with your location options. And if you plan to live or spend some time in the property, there’s a whole additional set of criteria to think about. With all of this in mind, then, here are some of the main things to consider when selecting your investment destination.
Living There, or Renting Out?
If you plan to live in the destination you choose you’ve got a lot more to think about than simply the economics of the decision. It’s essential to select an area you like: if you’re a rural bird at heart, a long-term investment in a large city like Los Angeles or Chicago isn’t the smartest move. Living in a property also means you’ll need to think about your personal circumstances and needs before going ahead, such as, if you have a dog, proximity to a dog walking area.
If you’re going to rent out the property you’ve got a whole set of factors to consider. Some parts of the US, especially the big cities popular with young people, are hotspots for landlords. Other places are much more ownership focused, and that can mean low demand – which in turn could mean you run the risk of long periods with no tenants. It’s worth speaking to a local real estate agent to get a feeling for the buoyancy – or otherwise – of the rental market in your proposed destination, and then use that to inform your decision.
Price and Affordability
The most important criterion to use is affordability. It’s this that will make or break your decision: if you don’t have the cash outright and you’re going for a mortgage, you’ll need to think about how you’ll cover your new financial obligations. Remember to also factor in any building work or maintenance tasks that you might need to do. Don’t forget, though, that many locations have a range of cost levels on offer – so don’t rule an area out without properly investigating it first. The Park City homes for sale enjoy a variety of prices, and this diversity exists across the country.
The tricky part about real estate investment is that you’re deciding in the here and now on an asset that you hope to last you well into the unpredictable future. A city which right now is seeing rising prices as a result of economic upturns, for example, can quickly turn the other way if a change in fortunes occurs. A large manufacturing plant could close down, for example, leading to employees (and possible buyers or tenants) all moving away. Of course, the reverse could happen, and your investment could multiply in value – but thinking about that isn’t as pressing as thinking about risk!
While nobody has a crystal ball, it’s possible to make some fair assumptions about what parts of the US will remain popular for a long time to come. Established cities with diverse economic bases, such as New York City, will most likely have at least some stability. Areas close to globally famous tourist sites will always be in demand in one way or another, so that could be another option. It’s a good idea to do some research into the medium to long-term economic profile of the place in which you plan to invest, paying special attention to the prospects of any large employers remining in or setting up in the area.
Choosing a destination for real estate investment isn’t always straightforward. With everything from potential rental yields to long-term security on the cards to think about, there’s no easy answer. Though, the main issue you’ll face is affordability – so getting a handle on your financing plans is essential. And once you’ve brought demand and market volatility into the equation, you’ll have plenty more to think about when making your decision.