More millionaires have been created through investing in real-estate than any other type of investment. For the unprepared and uninitiated, however, the potential for financially catastrophic decisions is a definite concern. In this article, we look at some of the key factors that influence residential investment properties as it relates to choosing a location.

Strong renter and buyer demand for your residential investment property is the single most important factor affecting the short and long term value. So, in order to be successful, you should be buying rental properties in areas that people want to live. As simple as this sounds, many excited, new investors don’t stop to consider the long term fundamentals of an area when getting started with real-estate.

Neighborhood Level:

There are several factors that will impact your real-estate return-on-investment and should be taken in to consideration as you begin to narrow down the neighborhoods within your selected city. Proximity to shopping, business, work, transportation and school should all play a role when buying rental properties. Investing in real-estate near (but not too near) the future site of transit stations has produced properties that have appreciated at a much greater rate than average. Consider the city’s expansion plans for any light rail or other public transportation projects. From the daily commute to the household shopping, access to transportation and relative location to amenities are some of the most significant factors people consider when choosing where to live and when buying residential investment property, should be a major factor in your decision.

City Level:

Location factors affecting your residential investment properties start to become more specific as your geographic location begins to narrow to the city level. A city’s policies on attracting and retaining business are very important to the long term outlook for immigration, in-migration and jobs. Broader local factors, like diversified industries and large regional employers become increasingly important.

When buying rental properties, and considering specific cities, look for an unemployment rate that is less than the state and national average. Look also for higher than average (State and National) income. Higher than average incomes and strong local employment mean the area is growing and will attract more people.

State Level:

State regulation and fiscal policy can have a significant impact on residential investment property. Personal income tax, corporate tax, as well as goods and services sales tax can have a huge impact on the in-migration of people and business. More taxes and regulation means fewer jobs and businesses. Fewer jobs means fewer people, fewer people means less demand for your property (i.e. reduced property appreciation, rents, and lower overall return on investment from your rental property). Consider states with strong, pro-business policies, when investing in real-estate.

Finding positive rental property cash flow, requires that you consider many factors with performing your property investment analysis. Along with situational factors like location, real-estate investment calculators can also help to easily and quickly determine if your potential investment will produce positive cash flow. They can also play a big part in helping you project the return on investment of your rental property and allow you make predictions well in to the future. You can find this and other real-estate calculators at www.verusdecisions.com.