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How Real Estate Location Effects Your Investment

Location, Location, Location

Location, location, location. Yes, real estate really is about location. As one of the largest investments you will ever make, real estate is still a surprisingly confusing issue for most people. The majority of real estate buyers have little knowledge when it comes to the market or economic factors surrounding the purchase of a home. Consider location as an example; ask people where the best areas to buy are located and most don’t know. What states are gaining population? What states are losing people? What counties in each state are good or bad?

When comparing real estate locations or trying to find the best real estate cities, don't concentrate on monthly payment or square footage alone. Of course, it is important to find a property in your price range but calculate the entire cost of ownership including the long term resell value and holding costs.

For instance, let’s assume two buyers both purchase a home with a monthly mortgage of $1,000 per month. One is in an area that averages 2 percent appreciation per year; that means they are barely keeping pace with inflation. Another is in an area averaging 12 percent per year. Each keeps the home for five years.

The first buyer hasn’t even kept up with inflation so even though they may sell and have money in their pocket at closing, the reality is the next home they purchase will require even more money. They are behind the game at that point. On the other hand, by purchasing a home in a rapidly appreciating market, the second buyer preserves his/her buying power while beating inflation. In fact, it’s almost like living in the house for half price! They get back a significant portion of what they paid toward the mortgage for the entire time they lived there…all tax free!

Ask a local Homes & Land Realty Expert any questions you may have about the home buying process or begin your new home search now by reviewing our complete list of real estate listings.

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