Whether you’re “just a small-town girl livin’ in a lonely world” or “a city boy born and raised in South Detroit,” your “Journey” to real estate success is the same – build relationships within and make good deals based on your market. Sure, the small town and big city worlds of real estate are quite different, but have no fear, and “Don’t Stop Believing” – by recognizing their differences you’ll be able to catch the “midnight train” to success.
- The Prices
You probably already know that property in New York and Los Angeles is bound to cost more than a similar property in Wyoming or North Dakota. However, the degree to which that is true may surprise you. Be sure to check the average prices in any region before you buy, and expect it to be far more expensive in areas such as NY and LA, which are traditionally more in demand.
- Know the Price to Rate Ratio
This is one of the most important metrics for new real estate investors to learn. The price to rate ratio is calculated by taking the average property price in a given market and dividing it by the average cost of rent annually. Once again, you should expect this to be much higher in a city such as New York as opposed to a small town.
- Understand the Competition
On the one hand, added competition can initially seem like a challenge to your hold on a market, and it certainly can be. On the other hand, competition between different parties can drive the price of a region up even further. Take the time to study your competition, see what they do well, and where you can gain an advantage.
- Short-Term Versus Long-Term Returns
If you buy a property outright, chances are you’re planning a long game, and thus banking on long-term investment. On the other hand, if you are flipping houses or renting, short-term investments may be your goal. The key here is that both of these goals require different approaches. Decide which approach appeals to you and tailor your tactics accordingly.
Keep these factors in mind and you’ll be better suited to the real estate market.