June 17, 2024

    Investing in real estate across America

    America has one of the largest real estate markets in the world; it’s recently been valued at about three trillion dollars. For an investor, that is both a blessing and a curse. On the one hand, the sheer range of choice that a modern property investor has is huge. With so many different geographical areas, cultures and markets to choose from, America has it all.

    But wading through all of the options and finding a place that suits your investment needs can sometimes seem like looking for a needle in a haystack. Whether it’s locating a market with a strong rental sector or simply locating somewhere with affordable upfront investment costs, there’s a lot to think about. Here, then, are some tips for working out whereabouts in the US will work best for you.

    Consider diversification

    When you have chosen a location for real estate investment you need to decide whether or not to buy more than one property. That, of course, will depend on your finances – and in some cases you may only be able to afford one. However, if you can afford to build a portfolio of different kinds of properties it is a wise move, as that way you won’t be over-exposed to any one particular market. This practice is called diversification, and it’s one that has been used successfully by investors in a range of different asset classes.

    Back to property: say you decide to invest in Seattle, which saw attractive house price rises of 45% between August 2016 and August 2018. Such an investment could go one of two ways in the long term. It could prove over time to be the next big sustainable investment hotspot, or it could turn out to be a bubble and the overall value of properties could go down. But if you set aside some of your budget to invest in a cheaper place which offers lower rental returns that are more sustainable over a longer term, you’ll have hedged your bets, and in the long run you are almost certain to benefit from rising property values.

    Sell on, or rent?

    Whether you go down the diversification route or not, you’ll still need to be sure that wherever you pick will have enough buyers, perhaps after refurbishment of a property, or tenants to keep the cash coming in so that you eventually make a profit from your investment. Whether you intend to buy and sell on or simply rent out the property to make a long-term profit has to be decided. In some places, such as central New York City, the rental market is highly active. In more suburban destinations, resale may be a more attractive option. It’s worth engaging the services of local real estate agents in, say, ten different destinations, and asking for an overview of rental and resale market performance. 

    Narrowing down the list

    In part, the importance you give to location when making your decision will depend on your ultimate investment goals. If you plan to retire to the property, say, you may want to choose somewhere with accessible amenities and a warm, relaxed pace of life. Or if you want to use the property as a holiday home in between rentals, having everything from sporting facilities to restaurants on hand will matter. Park City homes for sale in Utah are often used for this reason, and prices are relatively affordable; the same goes for destinations in some of the lesser-known seaside towns on both the east and west coasts.

    But if you plan to build a real estate portfolio, you will have more freedom of choice. It’s a good idea to look out for certain institutions which match your budget: those with smaller investments to make may want to consider small college towns and other locations which require a low-end, high-turnover rental market. Those with larger pots of cash, meanwhile, may want to consider downtowns in professional locations like Washington, DC or Manhattan.

    Investing in real estate can seem like a slog, especially given just how many decisions there are to make. But it’s important for all those involved in the real estate world to think carefully and not to rush into investment, especially when it comes to location. From making a choice about whether to diversify a portfolio in order to hedge against market shifts or simply deciding on whether to opt for a resale or a rental business model, getting good advice and reflecting on all the issues before going ahead is essential. 


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