After claims of ownership has been validated, the next is location of a property. Location of a property is the most critical factor in real estate investing and one of the greatest concerns of every investor. Location impacts on every real estate investment, whether commercial or residential.
WHY DOES LOCATION MATTER?
Property value: Property in prime locations tend to appreciate faster over time and command high resale value. Areas with improving infrastructure, desirable amenities, security and job growth will often witness steady rise in property values.
Transaction Time: When selling a property, it takes less time to transact on property in prime locations compared to property in low growth or declining areas. Many investors are usually interested in purchasing assets listed in prime locations and they receive better offers.
Rental income: Location affects the amount of money you can charge as rent and the quality of tenants a property will attract. At Aito Properties, we have found that areas with high demand for housing emanating from the presence of say, security, public institutions e.g. Universities or Government Ministries, growing infrastructure, among others, tend to command better rental income and quality occupants.
Tenant Turnover: Tenants will stay more in locations with good roads, better internet or telecom reception, stable electricity and job growth. This ensures a more stable and predictable income stream for an investor.
Property Risk Rating: Investing in areas prone to Government acquisition or town planning violation, flood, earth quakes, communal or cult crises will make the property look less attractive and risky to both tenants and future investors.
Future Development: Population movement or preferences, local or Government development mapping or initiatives will affect the potential value of a property.
Use as security: A bank or lender will value your property tendered as collateral based on its location.
WHAT TO CONSIDER WHEN ANALYZING LOCATION:
Crime situation: Safety concerns will affect tenants demand for a property. Check for communal conflicts, cult clashes, threat to construction workers, kidnapping, banditry, etc.
Natural Disasters: Areas prone to flood, earthquakes, wildfires are risky.
Government Acquisition: Areas with government (gazetted) acquisition interest may be risky to invest, especially when compensation has been paid to the locals or property owners. However, we have learnt of locations where Government intended to acquire for special purposes and the move failed but Government still maintain such locations in their records as acquired. These locations there become subject of future corrections or update of records.
Infrastructure: Availability of stable electricity, good roads and basic public transportation systems, and planned infrastructural improvements can enhance the value of a property.
Institutions: Public hospitals, good schools, banks and closeness to Government ministries or work places may be major considerations for many tenants and investors.
Population growth: Areas with increasing population will most likely witness high demand for residential and commercial spaces.
Economic indicators: Growing job opportunities, increasing income levels, and thriving economy are likely to attract more people.
Market trends: Look out for locations that consistently witness rising property prices, stable rental income and high demand for housing.
CONCLUSION
While location isn’t the only critical factor to consider in real estate investment analysis, it is a major puzzle in real estate investment. At Aito Properties, we combine our deep understanding of the local environment with financial analysis and market expertise to identify investment opportunities that suit each of our clients. We aim to build a network of satisfied clients by ensuring that we recommend or sell to each client secure assets that produce impressive returns on investment.