There are a few smart investments a person can make in their lifetime. One of them is real estate. Like all investments, real estate presents certain risks such as political events, climate change, and the post-pandemic economy.
But these risks can be mitigated by making wise and informed decisions. This involves analyzing the factors that affect real estate investment. When investing in real estate, you should look out for one crucial factor: location.
Why Location is Important
When you’re looking to purchase a property, the location should be at the top of your priorities. Your needs and the reason behind the investment could trace back to the place you’re looking to buy.
You might be looking for a beach house or a rest house in the mountains. Or, while you’re searching for a property, you might fall in love with a condo outside of the city. Then, you’ll have to weigh the pros and cons of living in a township or if you’re prepared to move far from home.
The property’s location does not only matter when it comes to personal preferences. It influences the property’s profitability as well. Property tends to be of higher value when it is in a highly urbanized area. For residential properties, the value differs depending on the neighborhood, among other factors.
Best Cities in the World to Invest in Real Estate
Places vary in investment value because each country, state, or jurisdiction has different laws, population, and economic standing. All these affect the value of the property, sales, and rent. The following are the best cities in the world to invest in real estate:
1. Los Angeles
Los Angeles is one of the top picks when it comes to long-term investment. It’s also a great place for residence, business, tourism, and entertainment. The 2020 median price of a property in Los Angeles was approximately $950,000. This is 5.7% more expensive than the previous year. Due to COVID-19, the estimated increase for 2021 is only 0.7%.
In 2020, the average price of a property in London was £666,842 ($928,000), a 5.34% increase within 12 months. It has dropped in the ranking of the best cities for real estate investment because of Brexit. However, foreign investors don’t entirely discredit London because of the other advantages, such as using the English language, favorable time zone, culture, and labor pool.
Paris has a rich culture, history, and tourism. It is also one of the best places to invest in real estate. Paris apartments were priced at €10,460 ($12,000) per square meter during the first quarter of 2020. This was a 7.95% increase in price, and the price has gone up by the second quarter with €10,690 ($13,000) per square meter.
Best Cities in the US to Invest in Real Estate
According to the International Investor Survey in 2018, the top five most stable and secure countries to invest in are the United States, Germany, Canada, United Kingdom, and Australia. Since the US remains one of the best countries to invest in, here are the best cities in the US to purchase a property:
- Orlando, Florida
- Atlanta, Georgia
- Las Vegas, Nevada
- Charlotte, North Carolina
- Dallas, Texas
These cities have good and reasonable median sales prices and monthly rent for properties. Additionally, they show promising financial and social opportunities that make them suitable for residence and profit. Their economic growth provides ample job opportunities, as employment rates continue to rise. They also have specific industries that support financial development.
Other Factors to Consider in Real Estate Investing
Location may be the top factor to consider in real estate investment, but it’s not the only one. These factors should also be in your investment criteria to help you make the best decision.
1. Property Valuation
Property valuation refers to the economic or market value of the property. This plays a huge role in determining certain factors for financing, taxation, insurance, etc. It could be determined by comparing the prices of similar properties and the total costs of building the property and purchasing the land.
2. Purpose of the Property
Before purchasing a property, you should know why you’re buying it in the first place. The purpose of the property affects the value and possible income that it can generate.
3. Cash Flow and Expected Profit
The goal is to have positive cash flow and return on investment (ROI). A real estate investor should gain enough net profit after all relevant expenses. Potential sources of profit may include rent, appreciation, and sale, while costs include maintenance, construction, taxes, and depreciation.
Make the Right Investment
Real estate investment guarantees a good return—if you do it right. The location of the property affects the property valuation, price, and potential profit. Your personal preference also influences the location of the property you’re going to buy.
You should have learned something new after reading this essay. More suggestions can be found on this page: 10 Great Tips To Earn More In The Real Estate Industry
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