The Importance of Location When Buying Houses

In real estate, they say the three most important words are “location, location, location.” This is a silly old saying in our business, but there is actually a lot of truth behind it. Location is extremely important when you are buying a house. Whether it’s going to be your primary residence or you are buying for investment purposes, you will want to find a great location. Here are some of the factors to consider:

Market History

Learning more about the market’s history isn’t very hard. You can look up past sales data and historic home values. You can look up crime rates and other key demographic information. Know as much as you can about where you are buying and this can help you make smarter purchase decisions.

Market Future

In addition to researching the market’s history, you will want to look at its current and future outlook. Some locations may be on the decline, meaning home prices may level out or even drop over time. Other markets may be in a revitalization phase. You could have a great opportunity to get the house just in time for prices to start going up significantly.

Community Location & Amenities

Look beyond the house itself. Look at the neighborhood and other homes around it. Think about the location and how close it is to good schools, shopping, entertainment and work opportunities. These are all important factors that can affect a property’s overall appeal and value.

Vacancy Rates & Tenant Demographics

If you are buying a house to use as rental income property, you will definitely want to research the vacancy rates. You may find some red flags if there are a lot of vacant units nearby or extended periods of vacancy are common. Part of this will be looking at who your ideal tenants are, as well. This can often be determined by the location itself. Something close to a college may attract more students who are not likely to pay as much and are only looking for leases during the school year. Other locations and property types may be ideally suited for families or single young professionals.

Days on Market

If you are planning to fix and flip a property—or if this will be your primary residence with a plan to sell sometime in the next 5-10 years—you will want to look at the average days on market. Study comparable homes in the area and see how long they take to sell. How long has this home you are thinking about buying been on the market? Selling a house is about more than just the price you get. How long it takes to sell will also have a significant impact on overall profitability and planning.

These are just a few items to understand when buying a house. The location should play a major part in any purchase decisions you are making.

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