Investing in real estate has become a common tool amongst today’s home buyers in an effort to build generational wealth, or create a real estate portfolio that might allow for in country, and even worldwide travel. Purchasing a house is one of the biggest investments you will make, and while the property takes center stage, the neighborhood surrounding the home is just as important. Conducting good research on the prospective neighborhoods that your investment will be in can make all the difference between a smart investment and a costly mistake. Whether you are investing in real estate to use as a rental, or you’re investing in real estate to enjoy your forever home, keeping a few key points in mind will help ensure that your home either appeal to future renters, or suits your personal needs and wants for many years to come.
Why Researching Neighborhoods Before Investing in Real Estate is Crucial
1. Your Lifestyle Needs Take Precedence
Before diving into all the specifics of a neighborhood, it is important to identify the needs in your lifestyle. Consider your routines throughout the day, hobbies, and social activities. Do you prefer a busy urban environment, or are you looking to settle into a quiet suburban neighborhood with plenty of community events and ample green spaces? For families, perhaps proximity to top-rated schools and safe play areas is a priority, while young working professionals might prioritize good public transportation and dining options.
Tip for Investing in Real Estate: Sit down and make a list of lifestyle needs and preferences, and use this list to help you filter through prospective neighborhoods. For example, if you are a lover of the great outdoors, prioritize areas that are near parks and recreational facilities.
2. Evaluate Top-Rated Schools and Opportunities for Education
For young families, the quality of local schools can have a major impact on the homebuying decision. Researching schools in a desired location, as well as school district ratings, test scores, and extracurricular activities can provide plenty of great insight into the educational opportunities available in the area. Even if you don’t have children yet, or never plan to, residing in a neighborhood with highly-rated schools can enhance the home’s resale value.
Tip: Use good online resources like local school district websites or GreatSchools to cross-compare schools in your desired neighborhoods. You can also opt to visit schools in person to get a good feel for the environment. When investing in real estate you might not need to worry about schools for yourself, however, being within a great district is a great point that will help your rental stand out among others.
3. Explore Services and Amenities
The amenities that come with the neighborhood can influence your quality of life. Consider what facilities and services you think are necessary, like proximity to good grocery stores, healthcare services, shopping, and recreational areas. Being close to essential amenities can save you travel time and enhance your daily living experience. When investing in real estate, keeping the nearby amenities in mind is a great way to sell your home to potential renters.
Tip: Draw up a map of essential services that you require, then research neighborhoods that provide short commute or easy access to the desired amenities. You can explore local restaurants, coffee shops, and entertainment venues to gauge the vibe of the community before committing.
4. Check Out the Crime Rate and Safety
Safety is a big concern for many homebuyers looking in a new area, both for primary home owners who plan to occupy the home full time and for those who might be investing in real estate. Understanding crime rates of a neighborhood can provide peace of mind and help you to make the most informed decision. While no area is going to be completely crime-free, some neighborhoods are safer than others.
Tip: Local police department resources or websites can help access crime statistics of an area. Consider visiting neighborhoods at different times of the day and week to get a good feel of the safety of the neighborhood.
5. Keep a Close Eye on Market Trends and Property Values
When you are researching neighborhoods, it is important to analyze property values and market trends. This information can help you to determine if a neighborhood is going to appreciate, or if it will plateau. A neighborhood with rising property values can be a good indicator of a prime investment opportunity, while stagnant or declining values can signal potential issues.
Tip: When investing in real estate be sure to work closely with a trusted real estate agent who is familiar with the market in the area you are considering, as they can provide good insight into property value trends while assisting you in analyzing comparable sales within the area.
6. Assess Accessibility and Commuting Times
Commute times can have a major impact on daily life, particularly if you work in a different part of the city. Researching average commute times to your workplace or frequent destinations is important. Additionally, consider the availability of public transportation and proximity to major highways.
Tip: Use online tools like Google Maps to help simulate commute times at different hours of the day. This can help provide a realistic idea of how much time you will spend traveling every day.
7. Connect With the Community
Community can enhance your living experience, making it important to consider all the social dynamics of a neighborhood. Engaging with current residents can provide valuable insights into what it is going to be like to live in that area. You can easily gauge the friendliness of the neighborhood and the overall vibe by attending local events, visiting community centers, or chatting with neighbors.
Tip: Attend local events, like annual farmers’ markets or neighborhood gatherings, to meet the fellow residents and get a feel of the community. This firsthand experience can help you to determine if the neighborhood will align with your values and lifestyle.
8. Consider Future Developments
Consider the potential for development in the future in the area. Neighborhoods that experience growth often come with new amenities and services, which can enhance property values over time. However, rapid development can lead to increased traffic and changes in neighborhood dynamics.
Tip for Investing in Real Estate: Research local zoning laws in the area that you are considering relocating to, as well as upcoming projects in the area. City planning websites can provide information on proposed developments, helping you to assess how your future living experience can be impacted. Keep in mind, even if you’re investing in real estate and planning to rent the home, your future rentals will want to enjoy the home as well.
Thorough neighborhood research is an indispensable part of the homebuying process. When you understand your lifestyle needs, weigh different educational opportunities, analyze safety, assess property values, consider commute times, and connect with the community, you can make the best decisions for the location of your real estate investment. Investing in real estate can be a lucrative and rewarding journey, ensure you have a trusted real estate agent by your side to find you the perfect property in the perfect neighborhood!