Real Estate Demand

1. Does the area have decent job growth? Ask local authorities and use census information. Ideally, you want to see job growth equal to or exceeding population growth. You also want areas with professional jobs moving in. It is estimated that for every professional job created, there are four service jobs created, and all those employees need a place to live.

2. Is the population growing? You can check the US Census figures online, or ask the local government if they have the statistics. Stay away from areas that have little growth.

3. Is there a decent quality of life? It’s 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. Is there wealth in the area? It’s a good sign when there is some degree of wealth in a town. Look for nice homes. Wealth means everything doesn’t die when the economy slows.

Real Estate Supply

1. Number of homes for sale? Lower supply of homes for sale means upward pressure on prices. This indirectly drives up rents as well, which makes for better investing.

2. New construction? Census figures can tell you what’s happened over the last ten years. 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.

3. Rent and vacancy levels? Rents have to be high enough, and vacancies low enough to justify investing. When we first came to Tucson, every building had vacancies We saw a man holding a sign that read, “Apartment – $250 Per Month.” A great place for renters, but not so great for landlords.

4. The available land that is buildable? Of course, less available land is better for future appreciation. When the land runs out, the prices start accelerating upwards.

When you use these questions to compare various towns and cities, you’ll see the differences more clearly. You’ll have an idea about how housing demand compares to supply in each. This will help you pinpoint the best investment real estate locations.

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If you are interested in real estate investing for handsome profits, you need to consider the curb appeal of any property you wish to rent or sell. A big part of the real estate game is buyer and tenant psychology. One thing that researchers have found about tenants and home buyers alike is that emotional response accounts for a great deal of investor success. In other words, the investors who can appeal to a tenant or buyer’s emotions — and make the tenant or buyer imagine themselves in the property — has the greatest chances of success. Curb appeal means improving the first impression that your property makes. Studies have shown that when the first impression of a property is positive, it is easier to convince a tenant or buyer to invest.

There are many ways that you can increase the curb appeal of your properties without a great deal of time and money:

1) Clean. A very tidy appearance is paramount to good curb appeal. Therefore, be sure to scrub the sidewalk, flagstones, walkway, windows, and siding. Mow the lawn, rake the leaves, clear the snow, and do everything you can to create the neatest possible appearance. You can do much of this yourself, although you may want to hire professionals or at least rent a high-pressure cleaning system for taking care of the exterior tiles or brickwork of a home. If the sidewalk outside your rental property or home is crumbled and in poor shape, you can generally contact the municipality to fix the problem.

2) Choose great colors. The color of your property goes a long way towards asserting good appeal. In general, you want to consider the colors of the properties around your property. If you are selling a suburban home, for example, located in a lot surrounded by pastel colored homes, you do not want to paint your property a right color. It would stand out too much. The right color blends well with the properties on either side of it. Make sure that the colors are fresh by applying a new coat of paint. Don’t forget the colors around the property, either. A bright green lawn or even crisp white snow contrasted with the few pine trees create visual appeal as well. If you’re interested in real estate investing, learn which colors to select, or hire a professional to select the right colors for you.

3) Repair. It should go without saying that you should ensure that everything outside is in good working order and looks attractive. This means that any broken walkways, bare patches on the lawn, and rickety shutters should be fixed up at once. You’ll find more success in real estate investing if you are selling a property that people want to buy.

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1. Renting single family homes. Good points: An easier way to get started, and good long term return on investment. Bad points: Being a landlord isn’t much fun, and you typically wait a long time for the big pay-off. You also lose all your income when a house is vacant.

2. Fixer-uppers. Good points: Fast return on your investment, and it can be more creative work. Bad points: More risk (many unpredictable), and you get taxed heavily on the gain.

3. Low income housing. Good points: Similar to any other rentals, but with higher cash flow. Bad points: Similar to any other rentals, but with more repairs and tenant problems.

4. Selling rent-to-own houses. Good points: If you buy, then sell on a rent-to-own arrangement, you get higher rent, and the buyer is usually responsible for maintenance. Bad points: Bookkeeping can be tricky, and most tenants don’t complete the purchase (this can be an advantage too, but it does mean more work for you).

5. Commercial properties. Good points: Multi-year triple-net leases mean little management and high returns. Bad points: A tough market to break into, and you can lose income on vacant storefronts for a year at a time.

6. Land, split and resold. Good points: Simpler than some real estate investments, with the possibility of great profits. Bad points: It can be a slow process, and you have expenses, but no cash flow while you wait.

7. Boarding houses. Good points: You’ll generate more cash flow renting a house by the room, especially in a college town. Bad points: You’ll generate more headaches renting a house by the room, especially in a college town.

8. Invest cash, sell with terms. Good points: A high rate of return is possible by paying cash to get a good price, and selling on easy terms to get a high price AND high interest. Bad points: You need a lot of cash, and you tie up your capital for a long time.

9. Invest, live in it, sell it. Good points: The tax law lets you fix it up, and sell it for a big tax-free profit after two years (if you live in it), then start the process again. Bad points: You may become attached to your investment, and you’ll have to move a lot.

10. Pure speculation. Good points: You can make large profits buying in the path of growth and holding until values rise, and it is a low-management investment. Bad points: Growth in value isn’t always predictable, you have expenses with no income while you’re waiting, and transaction costs can eat much of the profits.

There are many ways to invest in real estate. These ten are just to get you thinking about what is possible, and what type of investing suits your personality. Once you figure that out, you may want to look into other categories of real estate investment.

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