When investing in real estate, some people prefer to do it in a market they know, usually close to where they live, on local properties. But some others take the risk to find new places where the profits could be greater. They don’t limit themselves to buy in just one area. Instead, they study different regions looking for the one that might offer a tempting housing market, better property prices, and positive demographics to support a growing real estate market.
The first thing to do when investigating which real estate market to invest in is to review overall property trends. To do so, we have gathered here some advice that will guide you through the previous research to invest in a foreign market.
Check out the taxes and demography
When searching for a place to make a long-distance investment, you should look at countries, states and cities without income tax or with low sales taxes, and even cities with tax incentives to real estate investors. That’s a way to reduce your fixed costs.
Another thing to have in mind is the area’s demography. You can invest in a metropolis or an area an hour away from a big city. Make sure the city has population and labor growth. To do so, you can use census information about population, economic and employment growth, as well as check on information such as household income and amount of renters versus the number of owners. This way you can divide the different areas according to their target, which will help you decide where to invest and in which type of property according to your capital and the conditions of the place.
Work with local real estate agents
Once you have chosen a city, the best thing you can do is work with a local real estate agent because they understand that particular market better than anyone. For example, property values may vary from one block to the other, which might cost you a lot. These agents have a strong sense of the local economy and will keep you updated on any activity or changes that may affect housing prices, and they can also manage the property and find tenants for you, two very important details if you are investing from a long distance.
Review the real estate market trends
Some trends are local, and as an investor, you need to know them. One of these trends might be the rise in apartment rental buildings instead of condominium buildings because millennials prefer to rent. But if you want to invest in a residential area, perhaps a condominium or a small family house will be a better choice.
There is also the trend of short-term vacation rentals, thanks to many new apps and platforms that allow owners to rent their properties per day. In this case, you should review the tourism in the area and the touristic seasons to make sure the place will be rented.
Decide on how much rental income you will need
As an investor, you need to make sure the future rental income can support the price you will pay for a property. That income has to be enough to pay the debt for the property, its maintenance and cover its taxes. As a general rule, the property’s price should be about a hundred times the rent cost.
Now you have a general outlook of the important things you need to check before investing in another location, you will be are able to specify in which city is best for you to invest. We assure you that the results are much more favorable when you make investments like these.