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Real estate is an attractive industry to invest your money in because its value goes up over time. Whether you want to buy your own home instead of rent or purchase a rental property, the structure’s location impacts everything from resale value to leasing rates.
Reports have shown millennials putting off homeownership until they could save and pay off costly student loans. In 2017, about 33% of homebuyers were under 30, but the number of younger homebuyers will rise by around 20 million through 2025. With so many new players in the market from around the country, knowing where to place your cash is vital.
Although there are some cities where real estate rises year after year and others where it sees significant losses, the exact location doesn’t matter as much as what you should look for in a neighborhood within any community. Here are some factors that determine the best places to buy real estate anywhere:
1. Economic Opportunity
Urban areas with a lot of economic growth are more likely to rebound from temporary economic downturns. Look for a place where people can find work, and you are sure to have new residents moving into the neighborhood and looking for housing. Movement drives up rental costs, sales prices, and property values.
2. Convenient Transportation
Unless your dream is to live in the country, and you don’t mind a slower growth in equity, look for a location where you can easily access public transportation. What options does the city provide? Can you hop on a bus, take a subway, or ride your bike? When buying in an urban area, make sure there are walking and bike paths.
Most real estate listing sites offer a walking score. What is it for the neighborhood you’re considering? If you buy smart, you can rent your house at a transit premium.
3. Crime Rates
Pay attention to the crime rates of the street the property resides on, plus the surrounding area. Local police reports and crime statistics shed a lot of light on activity in the area. The last thing you want to do is invest in a home and discover drug dealers live on all sides. While any neighborhood can change over time, do your homework, and you’re more likely to buy in a desirable area. Look for renovations and other improvements happening in the neighborhood.
If buying an apartment building or a condo, look at amenities and maintenance fees. Even a single-family home (SFH) in a suburban neighborhood could be a part of a homeowners association (HOA) with annual costs and regulations. Make a list of what you want for your property, such as a clubhouse for all residents.
5. High Occupancy
If you’re buying an investment property and plan to rent it out, check how many vacancies are in the area. Look for other homes that are renting and pay attention to what they rent for, what’s included in the package, and how long they stay on the market. When listings get snatched up quickly, and there aren’t many of them left, it shows the neighborhood is desirable, and you’ll probably be able to rent out your property easily.
6. Nearby College Students
Another option is choosing a location near a university. You can offer short-term leases to students or even rent out rooms in a home. Make sure everyone signs a lease and be clear on your maintenance expectations. While the rental will likely sit empty during summer months, you’ll easily rent during the school year. Some people buy a house for their own students and lease out the other rooms to pay the mortgage.
7. Vacation Opportunities
One of the best places to buy real estate for investors is vacation rentals through sites such as Airbnb and VRBO. Look for a property near popular attractions, such as a cabin in the Smoky Mountains or a beach house in Dayton. Pay attention to the factors listed above, plus how many other rentals are in the area and what the going rate is.
Choose the Best Location for You
The best places to buy real estate depends on where you live and which neighborhoods are in demand. While it is possible to own investments outside your area, you won’t be able to check on it or monitor activities. It’s best to start in a spot within driving distance. Do your research, talk to your financial advisors, and find a home you can afford in a great neighborhood.