Investment Vision

Real Estate investment takes vision.

One of the keys to long-term and even short-term real estate investment is learning to see property as it can be or as it will be versus what it currently is. Many opportunities are missed because understanding what an area will look like in 12 months or 24 months versus what it looks like now is difficult, but the rewards are there for those who learn to do it.

Have you ever heard something along the lines of, "I wish I had bought real estate there a few years ago, it is so nice there now, it looked like nothing back then. Who knew it would turn out so nice?".

Here are a few examples of how this happens in real life.

Example 1:

A new housing development opens on the outskirts of the city. Because the development is not centrally located, prices are 20% - 30% cheaper than homes in town. Many people pass on buying raw land, lots, and even rental homes there because they think that it is too far away. At this point we still don't know if it is a good deal because we would need to know more information, but the cheaper price is starting to look appealing. If we do some digging and find out some key information, we will know if this is a great investment.

Example 2:

Some condos are on the market. One of my friends says they are a great investment but another friend tells me they are horrible investments. To understand if condos are a good investment, information is crucial. You must know the median home price for the area. Condos that are located close to major arterial streets do better than those less centrally located. Remember though, that just because an investment hasn't performed well in the past, that it won't in the future. Condos are a great example. If you find out that key information you will find out whether it is a good deal.

Information is Key

Remember that information is key to seeing the vision of what the area will look like in the future. To get the information, you need to know what questions to ask and what to look for. Some of the questions are the same and some are different for the different types of investments. I will start off with some general things and questions you need to keep in mind and then discuss items specific to each

General investment ideas and questions to keep in mind

You need to at the minimum get a feel for city projections and plans for the area and expected growth towards this new development. Population increase and job growth in the area is one of the best indicators for good investment potential. Is the new development along a major growth corridor? If so, that makes a big difference. A new development seven miles down an infrequently traveled road out of town is not near as attractive as a new development seven miles outside the city but close to the major interstate. New growth tries to follows major roads since many homebuyers will likely need to commute to town for work.

Raw land - You need to get a feel for the scarcity of comparable raw land in the area to know if the land you are looking at is a good value. You need to have a feel for where utilities such as power, water, electric, phone, and sewer are in relation to the land you are looking at. If city water is not available, are you able to drill wells on the land and is the water drinkable. If city sewer is not available, are you able to install septic tanks?

Lots - Whether lots are a good value has mostly to do with what demand will be in the area for people building homes or businesses. Lot value is mostly determined by scarcity and demand. As each home or business gets built on comparable lots, that takes the competition off the market. If you buy early in a development where there is a lot of demand to live or build a business in the area, the lot should do well as more and more is developed in the community.

Homes - Homes do well in areas where people want to live. From a high level perspective, that is a big reason why real estate in the South-West has done well and will continue to do well. Good climate, no hurricanes (in New Mexico anyway), and a state government that is doing everything it can to recruit new businesses to the area and to keep the ones it has. From a more local level, you need to find communities where, if the market slows down and people can be choosy, they will want to move to the location you are buying in. In a hot market, almost all homes go up in value. In a slow or slowing market it is imperative to be picky about the community and the homes you purchase. There could be a number of factors affecting this. One of the biggest is proximity to work and shopping. Another big one is being close to good schools. Central location and good schools will get you started on the right path.

Condos -Once the median home price reaches the right level, condos do great. First-time home buyers now have a harder time affording regular housing and so condos are the next best thing. Even if the condos are old and starting to look raggedy, they may still be a good investment but you must know some key information first.

Part of what makes me really valuable to you is my information, as well as my knowledge of how real estate and real estate investment work, and my experience with real estate investing. Let me work with you in developing your investment vision and helping you to find an investment that works well for you. I would love to talk you through it and give you the information that will help you make a great choice on your next investment purchase.