Don’t Forget “Location, Location, Location”
For as long as I can remember I’ve heard “location, location, location” chanted by experienced real estate professionals and investors. From my own personal and professional experience, I can attest to the importance of carefully evaluating the pros and cons of location before making a decision to buy, or to pass.
In a low-inventory environment such as now, buyers who are qualified and motivated to make a purchase can become frustrated. Not only can it be difficult to find an available home that meets their criteria, but when they do, they often compete with one or more buyers.
If you’re one of those buyers who’s been looking for a while—perhaps “just missed out” on one or more homes to other buyers—it could be tempting to pursue a property you might not otherwise have found attractive due to location. Don’t do it! Not unless you’ve fully considered the consequences, weighed the pros and cons, and have a good case for buying a location-challenged property.
By location-challenged, I mean any locational characteristic which significantly affects buyer desirability and market value. There are many possible examples, but here are a few I come across fairly often; homes on very busy streets/intersections, properties that sit near a freeway, or experience significant commercial noise such as flight paths or trains. Nearby businesses that are an eyesore or attract undesirable traffic, such as a liquor store, can also tarnish an otherwise perfectly good property.
While properties in less desirable locations are often priced more attractively and have less competition than their counterparts, the ball-and-chain that kept the property on the market longer and for a lower price is now carried by the new owner.
One point of clarification: I’m not saying that location-challenged properties can’t be a good investment. In fact, with the right information and willingness to speculate/take on risk, buying properties in up-and-coming areas or in the path of development or gentrification can be a score. The key is having realistic insight as to the potential of the property, and likelihood and timeline of achieving that potential. Once again, location, location, location holds true. Finding a sure deal on a property that is currently challenged by location takes a lot of homework, and even then, there are no guarantees.