Top 4 Real Estate Market Trends & Red Flags to Look For, Before Investing
You no longer have to sip your cup of joe on your way to your 9-to-5. Instead, you’re sipping coffee as you browse the Internet from home, looking for the next piece of real estate to flip for a profit. All of a sudden, you shake your head and snap back to reality. You were daydreaming. But who says your dream of becoming your own boss as a real estate investor can’t become your reality?
Research shows that investment in commercial real estate in particular increased 17% between the fall of 2017 and the fall of 2018, and residential real estate also remains attractive to investors. So, if you’re asking yourself, “What is the best long-term investment?”, now appears to be as good a time as any to seriously explore investing in single-family homes, apartment communities, or even business spaces as your next career move.
Of course, just like the greater economy, the real estate market goes through various highs and lows, so it’s critical that you assess the current market before simply diving in. Here’s a rundown on the top four real estate market trends or red flags to look for before investing in a deal.
1. The Demand for Property
If you notice a slip in property demand and/or you see businesses folding in a real estate market, this is a sign that you should not invest your money in the area right away for two reasons.
First, if companies are shutting down rapidly, this means that property values overall may start to decline as people move away and seek new job opportunities. Second, if business owners are avoiding the area, this might mean that the demand for properties in that area is low for one reason or another. If you ignore these signs and move ahead with a property purchase there, you may not get much return on your investment when you decide to sell. Or it might take a while for you to unload it.
Reasons for Low Interest in an Area
If a certain area is not piquing the interest of buyers, the culprits could be increasing crime rates, new developments close by, subpar school systems, or a less-than-stellar economy. No matter what the situation may be, it’s a good idea to select locales that are established or are rising in popularity if you want to avoid profit loss in the future.
2. The Job Market
In a similar vein, before purchasing real estate in a certain market, you should take a detailed look at your target area’s current job trends. For instance, are hiring volumes climbing and what kinds of positions are available?
This is critical because job market trends have a correlation with real estate market trends. For instance, if jobs in an area are not high-paying and don’t offer much growth potential, there will be fewer reliable renters or buyers available to you.
3. The Commercial Sector
A commercial sector that is stagnant in an area is a major red flag for investors. If businesses in a locale haven’t been there very long or if there aren’t many new companies moving in, this area might not be the wisest place to pursue an investment property. Many companies invest in their communities, so areas with lots of industry or other businesses are likely more financially sound.
Also, see if any major employers are planning to close their doors or downsize in the near future. If it appears that large employers plan to stay put long-term, this is good news for you. You can find information about which companies are planning to stay or go by reviewing local newspapers or even city council meeting and zoning board meeting minutes.
4. Community Planning
If the community you’re targeting for your investment property has a solid master plan in place, it’s likely a good one to stick with. That’s because master plans essentially lay out communities’ visions for themselves, and visionless communities will likely end up fizzling out at some point.
Elements of a Solid Master Plan
A strong master plan at the community level should explain not only how the community sees itself but also how it plans to turn its vision for itself into a reality. This plan outlines truly realistic and relevant changes, and it also focuses on actual solutions. Furthermore, it fosters innovation and promotes problem-solving. If there is little evidence that a community’s master plan is being executed, you may want to bypass that community when it comes to looking for a real estate investment property.
Start Real Estate Investing Today!
If you’re asking, “What is the best long-term investment?” and you are interested in getting your feet wet in real estate investing, I can help. In no time, you can experience the unique monetary potential that real estate has to offer. Get in touch with me today to find out more about the current real estate market trends and to start earning money as a real estate entrepreneur.