Real Estate
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Basic Foundation
Location, Location, Location
Just like stock, you need to find a home that will deliver a great return over the course of 5+ years. Unlike stocks, real estate takes a little longer to double your money. Unless you plan to flip homes for a small return.
In order to make a good ROI, the first thing you want to look for is a great location. Rule #1 in Real Estate is, Location, Location, Location. The location can turn a $300,000 home into a $600,000 home and vice versa. I cannot stress this enough, location is the most important thing when buying real estate.
The variables you want to look for in order to determine a great location are…
– The surrounding schools. How good are they? Parents will pay more to put their kids in a better school. Great schools also help properties to maintain their value.
– Entertainment. Homes near theme parks, movie theaters, malls, and restaurants are also going to end up giving you a better return on your investment, compared to a neighborhood or home that is in the middle of nowhere and far from these things.
If you plan to rent out your home, then you will need to figure out what type of tenant you are looking to attract. If you are looking to attract an older tenant or someone more long-term. Then you will want to stay away from college areas, as these rentals tend to attract a lot of college kids who are looking to rent for 1-4 years. And sometimes you may end up with tenants throwing a lot of parties, and have to deal with noise complaints.
The IDEAL location would be in an area that has less going on at the time of your purchase but is working on expanding HEAVILY over the next 5-10 years.
For example, the Orlando area in the 80’s and 90’s was right on the edge of exploding into the tourist capital we now know it as today. But to acquire a property back then and to hold it through the 90s would have been an AMAZING investment and given you a massive return.
This approach will ideally get you to get into a property for cheap and give you a very heavy upside over the upcoming years as the area is building up.