How do I know an area is a good location for investment opportunities?

[Justin Rademacher]

I get asked this question quite frequently. Through my experience with helping investors from around the country, here are 3 things to look for:

1. It is absolutely crucial to determine what type of investment opportunity you are looking to get into (str, mtr, commercial)? Once you figure that out, then you will want to start looking for areas that support that type of investment. Example, If I wanted to invest in STRs...I would probably look in areas where those are more common i.e Florida, Arizona etc. If I was looking for long term rentals, the Midwest may be a better option to take a look at. 

2. Find areas where there is development. My wife and I recently just bought a home in Cape Coral, we specifically were looking for homes that were in areas that had quite a bit of development in the surrounding area. On the block we purchased, there are 7 homes currently being built on that 1 block. Looking for development in the area will significantly increase future appreciation. 

3. Look for less saturated markets. When the area you are looking for is less saturated, there will be more opportunity. Naples FL is a very saturated market for the STRs, however certain areas of Cape Coral are a lot less saturated and provide plenty of opportunities. 

What other things do you look for when looking for good locations to invest in?