Due Diligence in Real Estate Investment

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Due Diligence in Real Estate Investment

If the ups and downs of the stock market have you feeling anxious about investing, there are equally lucrative alternatives. Consider real estate. It is a productive, generally stable, and secure means of investing your money. The key to a successful investment is making a move at the right time and with the right place.

Real estate agents and investment moguls like Aubrey Ferrao will tell you that location is everything when you are making a property purchase. Case in point? The return on Gulf Bay’s Aubrey Ferrao development in Naples, Florida. Combining the success of the Mystique project and the other developments in the portfolio, the market value for these investments exceeds five billion dollars. Ferrao and team have capitalized on location.

Top States for Real Estate Investment

As far as the country goes, there are over 50 states and territories where you could focus your investment money. If you look at the data from Realtor.com, you will find traditional metrics for evaluating top states. This site ranks them as follows: Nevada, Texas, Florida, California, and Utah. These are states calculated on the value of home sales and prices.

Related to real estate investment:

However, a site like Airbnb uses operation data that expands the comparison of real estate. It presents statistics that account for rental and cash on cash return metrics, which are often substantially higher than the traditional assessments of home values. Airbnb also looks at the median property price when making an investment analysis.

The site has chosen West Virginia, Iowa, Ohio, North Dakota, Indiana, and Kansas as leading rental income states. The prime push for these states comes from the data that should Airbnb rental income is almost double what traditional rental income levels area. In addition to the profit levels, these states also enjoy much higher occupancy rates than others.

Factoring in Demand

Your desire to invest in real estate should take into account potential fluctuations in demand. The consumer market is the driving force behind any aspect of the economy, and housing is no different. However, housing demand is a long-term investment that should take into account local population density. If the housing demand is high, the greater your potential as an investor. An example of this is the Ohio housing market, Ohio has a positive correlation between population and density, increasing the demand for housing all across the state.

Following the Job Market

You should also consider the data on the local and state-wide job market. The state’s employment rate can help dispel fears about current national trends, as state-level data reveals whether or not businesses and communities are investing in the local and regional economies. For states that play host to Fortune 1000 companies, there increased economic potential and subsequent demand for housing.

The New York real estate market and the Houston real estate market rank number one and two in business-friendly states. These states see a rapid increase in demand based on job-related moves, and the overall effect (especially for Texas) is a booming economy. Your investment should consider what the next few years or decades will mean for employment.

Figuring Out the Taxes

A savvy real estate investor will look at every statistic related to a potential property or community, including property taxes. You need to the overall state of investment, as a low purchase price could still be steep in taxes. The states with the lowest property taxes have been found to be Louisiana, Hawaii, Alabama, Delaware, and West Virginia. Low property taxes may indicate that it isn’t a prime location worth investing in, but it is still a worthwhile consideration.

Real estate investments have a lot of moving parts, and a lot of information to consider before you go out looking for a property. Do your due diligence and know what you are getting your self into, maximizing your investment potential.