Did you know about the three most important secrets of real estate investing?
They are the following: “location, location, location.”
Now consider this: Which of the two properties would you rather buy?
- A bad house in a good location
- A good house in a bad location
To give you a hint, let this real estate principle guide you: “A property of higher value is negatively affected by its association with lower value properties.” That’s the Principle of Regression and is mostly applied when appraising a property. The counterpart principle is called the Principle of Progression, which implies that the lower value property tends to be positively affected if it is in close proximity to a higher value property.
Principle of Progression and Regression Explained
So needless to say, if you can afford it, you should buy a property with a good location. A bad location is like a waste of money.
But how do you determine a good location from the bad? Below are some tips.
Good Location
1. Close To The Best Schools — The presence of good schools in a community almost always determines whether it will go up in value or not. Especially if you have school-age children, you should select a house that is near the best schools in your area.
(Related Link : First-Time Home Buyer?)
2. Close Business Shopping Centers and Recreational Facilities — Many of us Filipinos would not want to stay at home, especially on holidays and non-working days. We would rather be at the malls, dinning out or in any other places. If you live in a house that is a just a few-minute commute to the business centers, that’s a good pick of a location.
3. Accessible To Public Transportation — This is quite self-explanatory. The main advantage of having access to public transportation (jeepney, bus, taxi, etc) is that you can use those if your car break down for some reasons. Also, some families would prefer not having a car, so public transportations are very useful for them.
4. Peaceful, Safe and Quite Community — It’s very important that you live in a city or town where the crime rate is very low, where you and your family can be safe and at peace with everyone in the neighborhood.
5. Community with Stable Economy — Select a place where business is booming and the unemployment rate is low. This is an indication of a progressive society.
Bad Location
1. Deteriorating Neighborhood — Have you seen a village or even town where the road networks are dilapidated and almost left unmaintained for a long time? How about a place where squatters are in abundance with no signs of being relocated? Beware of investing in those locations.
2. Dangerous and Hazardous Communities — Chemical Factories, Power Generators, Rail Roads, and High Speed Expressway. You don’t want to risk your health or life living in such places as these. And naturally, no one in his right mind would want to live there, too.
3. Economically Depressed Cities and Towns — War-torn provinces, rebel-infested places and cities where businesses are dying. These are examples of locations that you should avoid as much as possible.
4. Noisy Areas and Crime Ridden Places — Of course, you want to sleep soundly at night. And you want peace and harmony with your neighbors in your community.
5. Low Quality Facilities — Think: clean water supply, uninterruptible electrical supply, cemented road networks and all those things that allow the residents of a particular place to live in convenience. If those things are missing, maybe you should cross that location out of your real estate investment list.
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This article is written by Carlos Velasco.
This is another word for Down Payment, a term mostly used by Banks; Pag-IBIG uses the term equity to mean the same thing.