Where to Find the Best Places to Invest in Real Estate

Where should you invest in real estate?  If you know an area well, and have enough experience investing in real estate, you can make money almost anywhere.  However, there are always places that are better or worse for real estate investments – places that have a better demand/supply ratio.  Use the questions below to find them.

Demand Questions

1. Is the population growing fast?  Check the US Census figures online, or ask the local government if they have the statistics.  Stay away from areas that have little growth.
2. Is job growth decent?  Again, ask local authorities or use the census information.  You want to see job growth equal to or exceeding population growth.  The people have to have money to pay for housing.
3. Decent quality of life?  This is subjective, but important.  Are there theaters and bookstores?  Count coffee shops and cafes.  Trendy areas usually have increasing demand for housing.  It’s also a good indication of a high quality-of-life if people are willing to take lower-paying jobs just to live there.
4. Wealth in the area?  It is always a good sign when there is some degree of wealth in a town.  Count rich homes.  Wealth means everything doesn’t die when the economy slows.

Supply Questions

1. How much new construction?  The census figures can tell you what’s happened over the last ten years.  Then check with the local authorities to see if the the number of housing units they’ve issued permits for is more or less than the expected population growth.
2. How many homes for sale?  A lower supply of homes for sale means upward pressure on prices.  This indirectly drives up rents as well, which makes for better investing.
3. What are rent and vacancy levels?.   Are rents high enough to justify investing?  Are vacancies low?  When we first came to Tucson, every building had vacancies, and we saw a man holding a sign that read, “Apartment – $250 Per Month.”  Great place for renters, but not a great place to invest in real estate.
4. Is there buildable land that is available?  Less is better for future appreciation.  When the land runs out, the prices start accelerating upwards.

Use these questions to compare various towns and cities, and you’ll see the differences more clearly.  You’ll see how housing demand compares to supply in each.  Finally, you’ll see where it is better to invest in real estate.

If you would like to learn more about investing in real estate for maximum cash flow, visit us at olddawgsreinetwork.com or listen to the Old Dawg’s REI Network podcast on iTunes, Stitcher , Google Play and iHeartRADIO!

Bill Manassero is the founder/top dog at “The Old Dawg’s REI Network,” a real estate investing blog, newsletter and podcast for seniors and retirees. His personal real estate investing goal, which is being chronicled at olddawgsreinetwork.com, is to own/control 1,000 units/doors in 6 years. Prior to real estate, Bill and his family lived in Port-au-Prince, Haiti as missionaries, serving orphaned, abandoned and at risk children for their nonprofit organization Child Hope International.