2018 Real Estate Investing Checklist
Purchasing property is always an exciting event in anyone’s life; however, it’s not always the most clear-cut decision one has to make. There are plenty of factors that go into deciding whether or not you’re even ready to look for property to invest in. Can you handle the financial burden of purchasing property? Have you settled down to the point where you are absolutely positive that you want to buy property? Why do you even want to invest in a piece of property in the first place? Questions will typically come out the floodgates before the search even begins in the first place, and it can seem very daunting. Once you’ve figured out that you actually want to invest, the process to actually purchasing can seem overwhelming, especially if you live in a large city like Pittsburgh, where there are hundreds upon thousands of available properties. It doesn’t have to be that way, though. To better prepare yourself for the real estate market, we’ve compiled a short checklist of things to bear in mind when looking for property.
As of 2018, the five top things potential investors concern themselves with are: location, return on investment (ROI) projections, demographics, price, and property details.
This is arguably the most crucial factor to consider in real estate investing. Depending on where you choose to invest, if you choose the right neighborhood, the location alone can drive up the value of your investment. Additionally, a number of opportunities are made available to those who do choose the right location. For example, “nicer” neighborhoods can typically be spotted close to high-paying jobs and other high-quality amenities like schools, libraries, and other public spaces. All of these factors have a direct effect on the value of your property.
In Pittsburgh alone, there are about 90 neighborhoods to choose between and each have its own character that contributes to the city’s overall personality. Here are some great locations to consider within Steel City.
This primarily residential neighborhood is perfect for young couples who are looking for a little more leg room and some distance from the bustling city center. Home to just over 6,300 residents, the median income in Highland Park has been reported to be at $66,985. The median sales price in this area is approximately $262,500.
Families with young children typically scour the city looking for neighborhoods with the best schools for their kids. Mt. Lebanon is home to some of the best educational institutions in not just the region but the entire country. These opportunities, however, cost a pretty penny, as the average median sales price is reported to be $237,000. Inhabitants of this family-friendly neighborhood are reported to have a median income of $76,953.
After spending a considerable amount of time in the suburbs raising your children, those who now have an empty nest might now be considering a move back to the lively urban scene. In the Strip District, you’ll have full access to chic lofts and condos and the newest restaurants. Here, the median income is totaled to approximately $70,706 and the median sales price is calculated to be at $239,000.
When you’re considering a particular neighborhood in Pittsburgh, there are a lot of different factors that should be taken into account. This is because all of the little quirks your neighborhood is directly tied to its value.
Other factors to consider include access to public transportation, infrastructure, utilities, the intentions of your local government, even seemingly small things like noises in the surrounding area and smells have affect property value.
Return on Investment (ROI)
Return on investment is the best way to calculate how much profit you can gain (or lose) off a particular investment, and it’s something you should be aware of when looking at the real estate market. After all, one of the biggest reasons why you invest in the first place is, ultimately, to make money. Calculating whether or not you have a good return on investment is dependent on a multitude of factors. For one, you need to take into account the state of the local market.
In Pittsburgh, the real estate market has been witnessing an increase in house listings over the past years. This means that, in comparison to other cities, more people in Pittsburgh have been looking for properties to purchase. And, because of the increase in buyers, this means that sellers will receive better offers more frequently.
Considering the local market in conjunction with a property that just so happens to be in the right location with all the right amenities and circumstances, and you might just have a good return on investment.
A neighborhood’s demographics are what gives a particular neighborhood its special characteristics. Data, like age, race, gender, income, crime rate, population growth etc., while often overlooked, play a major role in the real estate market. Whenever an area experiences a change in demographics, real estate trends are almost always impacted by it.
When you’re looking at property, take a peek at the demographics. You’ll know that you’re in the right area when most characteristics, like median income or crime rate, are positively reflected in data reports. It’s imperative you understand these trends, as they can make or break a deal on a property and give you important insights.
Let’s say, for instance, you’re looking for a property to rent out to college students in Bloomfield, a middle-class, historic Italian neighborhood that’s fairly close to Carnegie Mellon University. The main demographic in this area are college students; therefore, property owners who rent will experience higher turnover and maintenance costs.
This is an easy enough concept to understand; however, people still grapple with the concept of budgeting. What you can afford and what you’re willing to spend aren’t the same thing, and a budget should be one of the first things you establish going into the real estate market. How’s your credit? How much is your bank willing to lend you, and how much of that loan are you actually going to use? The higher you go, the more money you’re going to be spending on mortgage, so make sure it’s a price that you’re comfortable with.
One would think that the color of a house’s shutters wouldn’t have much of an impact, but that’s quite the contrary. Things like the windows installed on the property and the color of the front door all affect the investment value, and these are all trends that you should be aware of. You also need to take into consideration things that you absolutely cannot live without whether it’s the style of house or even the number of bathrooms. Most homes on the market aren’t new, so it’s crucial that you pay attention to things like the age of the property, the climate of the area you’re in, renovations, structural issues, roofing issues, etc.
By Clay Pitsenbarger