Have you ever looked at a property and wondered why it was so highly valued? Or seen a real estate deal you thought was too good to be true?
As anyone with long-term experience in the real estate market will know, house valuation is no simple affair. Of course, there are the obvious contributing factors – like the size of the building or how recently it’s been renovated – but there are also some more obscure variables that may not be apparent to the real estate investment buyer.
If you’re looking to get into investing in real estate then you’re going to need to examine the finer details. We can’t tell you everything to look for – that will vary depending on the property – but we’ve put together a list of some examples to show you the kind of things we mean.
School Districts Impact Real Estate Value
If you don’t have kids or aren’t likely to have them any time soon, then school districts might not be high on your list of priorities. That being said, they absolutely should be if you’re investing in real estate.
Particularly when it comes to large family homes, school districts can have a massive influence over a house’s value and it’s not hard to see why. The closer you are to a good school, the wider your potential pool of buyers.
Even for properties that don’t seem to have an obvious connection – such as offices – school districts may still have a knock-on effect. After all, with the recent increase in urban decentralization, the value of office buildings is shifting from central to more suburban locations. Given that high earners are more likely to live in good school districts, it therefore makes sense that they would want local offices.
Waterfront Real Estate
As a rule of thumb, there is always a premium on waterfront properties. As with good school districts, waterfront or water-view properties increase the pool of prospective buyers. Even a run-down old property will be more valuable if it’s near the water because the land that it’s on could be profitable for the tourism industry.
Neighborhood Reputation Impact on Property Value
It might seem obvious to some, but even a nice house on a nice street can be brought down by the reputation of a town or neighborhood as a whole.
On a basic level, this has to do with things like crime statistics or average income levels but sometimes, reputation can be more complicated than that.
Now that’s not to say that run-down neighborhoods are a bad investment. Actually quite the opposite.
On plenty of occasions, in fact, low real estate prices have incentivized investments. Those investments have ultimately driven up the value of the neighborhood overall. One only needs to look at locations like Miami’s Wynwood, or London’s Camden district to see how early investors can turn a huge profit on these kinds of urban rejuvenations.
The Local Area
In a more general sense, you should really learn as much as you can about any local area before investing in real estate. The intricacies of local politics can have numerous, complicated effects on real estate prices. From zoning laws to shopping centers, the needs of a local population can be varied and nuanced, and a successful investor knows how to turn those needs into profits.
Remember, having the best hard lender money in the world makes no difference if you have not prepared your investment research correctly.