Evaluating a properties neighborhood is a critical first step in the purchasing process.
In fact, experts believe that starting with a small set of target communities is a good way to optimize your property search.
Key features to consider when evaluating a neighborhood are:
- Location
- Schools district
- Crime Rate
- Employment Opportunities
- Walkability and accessibility
- Entertainment
- Amenities
Location
The most important feature to consider when purchasing a property is its location. Location largely determines that market value of your property and is typically a result of the value of surrounding properties, school district and access to amenities such as parks and entertainment.
Many homes may have the right number of bedrooms, baths and are listed at a great price. But if they are located in undesirable neighborhoods such as too close to a major road or subpar schools its value will be limited.
Schools District
Residential real estate market value is heavily tied to the strength of the local school district. Neighborhoods with highly rated schools are desirable for families. As a result, homes in these areas are purchases at a higher value due to demand. Counties with neighborhoods containing higher home values generate a larger tax base that can be used to support local schools districts.
Use services like Great Schools to investigate a school’s score.
Crime Rate
Vandalism, shootings, and petty crimes can lower a property’s desirability. Few residents want to live or run a business in high crime area.
Employment Opportunities
Owning property in a high employee area is desirable. Consider if you target investment is near an industrial center, business hub, or within 30 minutes driving from a larger city.
Walkability and accessibility
For residents commuting for work or play, access to good public transport is important. Use Walk score to determine how easy it will be to get around town using bus, light rail, or subway from a given address.
Entertainment
Are there malls, walking travels, theaters, parks or other attractions located nearby? If you invest in a property that is near all these facilities, your property will be more desirable.
Download Home Buyer’s Guide Wish list – To track features to want
Vacancies in Surrounding Properties
You should avoid investing neighborhood with a higher or increasing number of vacancies. Vacancies results in shrinking tax base, which means less funding for schools and infrastructure such as roads and bridges.
High Average Rent
If you are buying property for the purpose of renting, analyze the rental market before purchasing. Zillow has a great feature for doing this analysis.
You should verify that the rental income in the neighborhood will be enough to cover your mortgage and leave you with reasonable profits.
Susceptibility to Natural Disasters
Investing in areas prone to disasters such as hurricanes, flooding will result in higher insurance premiums.
More: Invest in a rental property – Tenants and cashflow included. See how!
