The location of an income property: an important factor to consider.
When purchasing your income property, consider locating the building coveted.
The location of the building is a very important element in determining a good investment. It is often better to pay more for a property located in a better area that is easier to manage rather than buying a better priced property in a harder to manage sector of town.
This is the reason why an investor must take the time needed to analyze the district where the property is located and decide what is it that they want. Better located buildings come with a premium since they are more expensive, buildings in harder to manage sectors come at a discount since the investor is expecting a higher return on investment with this harder to manage asset.
Here are questions to ask to determine if the location of the building is interesting coveted.
- Is the building situated in an attractive physical environment? Are there green spaces nearby? Parks? Ease of transportation for tenants? How close is it to shopping and services for the future tenants?
- Is the area homogeneous? Is the building you are looking to buy is better looking than the others in the area? If it is the best building on the block the neighbours may be bringing the value of your building down. If yours is the worst one on the block, the tenants may leave your building to go rent in the other buildings in the area.
- Are the properties within the area well maintained? Are the other landlords taking care of their buildings? Or is the whole area in need of an upgrade?
Buying the right building in the right location at the right price is an asset for an investor. The wrong building, or the wrong area or over paying can be a financial burden and a major stress for the landlord for years to come.
Real estate is an excellent way for an investor to build wealth for themselves and to contribute to society by providing a roof for the tenants living in their building.
The research done up front is very important as it saves many hassles and headaches later.