Key Takeaways:
– “Location, location, location” is a well-known rule in real estate that emphasizes the importance of choosing the right location when buying a property.
– The origin of the phrase is unknown, but it has been a significant consideration in property buying for many years.
– Factors to consider when choosing a property location include proximity to work, schools, friends, and family; safety; amenities; transportation; and future development.
– After selecting the right submarket, other location factors to consider include the neighborhood, negative external factors, sun exposure, and the quality of neighbors.
– The location of a property impacts its value, investment potential, quality of life, and resale potential.
– Ignoring the importance of location when buying property can lead to challenges and difficulty in achieving investment objectives.
– Location should be given significant emphasis when evaluating investment opportunities in real estate.
BiggerPockets:
When you ask what the most important factor is when buying a piece of real estate, whether it is a primary residence, a second home, or an investment property, their response will often be the old adage: “location, location, location.” It’s a well-known, trusted rule that emphasizes the importance of choosing the right location when buying a property. A property in a good location will usually come with a higher property value, higher appreciation rate, and will offer a better quality of life.
Who Said It First?
When putting this article together, I was hoping to go down the rabbit hole and uncover an interesting backstory on the origin of this famous buying tip, but I was surprised to learn that nobody knows for sure where the phrase originally came from.
Some journalists have reported that Lord Harold Samuel, a real estate tycoon from Britain, was the one to first use the phrase. But that was debunked by The New York Times when the newspaper found the phrase first used in a real estate classified ad in the Chicago Tribune in 1926.
Regardless of the origin of the expression, it has been and always will be one of the most important considerations when buying property.
Factors to Consider
There are a handful of factors to consider when it comes to picking a property in the right location. These include:
- Proximity to work, schools, friends, and family: How close is the property to your office, your kids’ school, or other destinations you plan to visit often?
- Safety: You should research the safety of the neighborhood by using a tool like NeighborhoodScout to learn more about crime rates in the area.
- Amenities: Consider proximity to amenities like grocery stores, gyms, barber shops, hair salons, shopping, healthcare, parks, and restaurants.
- Transportation: Accessibility of public transportation, freeways, and proximity to the airport are other important factors.
- Future development: Are there developers in your area working on any big projects that could impact this area’s desirability in the future?
The House Itself
Once you know you have picked the right submarket, there are some other location factors to consider after you have honed in on an opportunity.
- Neighborhood: You need to understand the neighborhood that you are buying in. Look at the age of the homes, whether the community is governed by an HOA, if it is a gated community, etc.
- Negative external factors: Think about whether there are any negative external factors that could impact the house that you are thinking about buying. Examples include if there is a nearby commercial building, traffic noise, or if the home is in the flight path of a nearby airport.
- Sun exposure: Sun exposure should be a big consideration, especially when buying in desert climates. The home’s sun exposure will impact utility bills and natural light within the home. In a desert climate like where I live, a north/south sun exposure home is the most desirable.
- Neighbors: Do the neighbors surrounding the home you are thinking about buying have pride of ownership? If the neighbors have a bunch of clutter in their driveway or their lawns are not well-kept, that will impact the desirability of your home.
The Location’s Significance
The significance of a property’s location can’t be understated or ignored. Just some of the ways it will impact you as a buyer include:
- Property value: The location of a property has a major impact on its value. A house in a sought-after neighborhood, close to desirable amenities, and in a good school district will generally command a higher price than a similar property in a less desirable area.
- Investment potential: When you invest in a property as a flip or a rental, a great location can lead to significant appreciation in your property value over time.
- Quality of life: Your surroundings have a huge impact on your quality of life. Picking a property in a great location can ensure that your life (or your tenants’) will be enhanced due to these conveniences and amenities.
- Resale potential: If you plan to hold your property for the long term, picking the right location to begin with will prove to be valuable. A property in a strong location will be more desirable to buyers while increasing the likelihood of your home selling faster and for more money.
The Bottom Line
This old “location, location, location” saying is a timeless, invaluable rule that we all need to be mindful of when buying real estate. There have been a few times in my real estate investing journey where I have ignored this principle and bought a property in a location that did not check all the boxes because I was eager to do another deal. In both instances, I faced challenges with achieving my investment objectives because I ignored this cardinal rule.
How much emphasis do you put on location when looking at an investment opportunity?
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.
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Property Chomp’s Take:
When it comes to buying real estate, one phrase has stood the test of time: “location, location, location.” This simple yet powerful adage emphasizes the importance of choosing the right location when purchasing a property, whether it’s for personal use or as an investment. A property in a good location not only comes with a higher value and appreciation rate but also offers a better quality of life. But where did this famous buying tip originate?
Surprisingly, nobody knows for sure. Some have attributed the phrase to Lord Harold Samuel, a British real estate tycoon, but this theory was debunked when it was found that the phrase was first used in a 1926 real estate classified ad in the Chicago Tribune. Despite its mysterious origins, the importance of location in real estate remains undisputed.
So, what factors should you consider when evaluating the location of a property? Here are a few key considerations:
1. Proximity to work, schools, friends, and family: How close is the property to your workplace, your children’s school, and other places you frequent? The convenience of location plays a significant role in your daily life.
2. Safety: Research the safety of the neighborhood using tools like NeighborhoodScout to gather information about crime rates in the area. A safe neighborhood is crucial for peace of mind.
3. Amenities: Consider the proximity to amenities such as grocery stores, gyms, shopping centers, healthcare facilities, parks, and restaurants. Easy access to these amenities can greatly enhance your quality of life.
4. Transportation: Accessibility to public transportation, freeways, and airports is essential, especially if you rely on these modes of transportation frequently.
5. Future development: Are there any major development projects planned for the area? This can impact the desirability and value of the property in the long run.
Once you have identified the right submarket, there are additional location factors to consider within that area. These include:
1. Neighborhood: Understand the characteristics of the neighborhood you are buying in. Consider factors such as the age of homes, the presence of a homeowners’ association (HOA), or whether it’s a gated community.
2. Negative external factors: Assess if there are any negative external factors that could affect the property, such as nearby commercial buildings, traffic noise, or proximity to an airport flight path.
3. Sun exposure: Sun exposure is particularly important in desert climates. The orientation of the home can impact utility bills and natural light within the property.
4. Neighbors: Take note of the neighbors surrounding the property. Neighbors with pride of ownership can contribute to the desirability of your home.
The significance of a property’s location cannot be underestimated. Here are a few ways it can impact you as a buyer:
1. Property value: The location of a property has a significant influence on its value. A property in a sought-after neighborhood, with desirable amenities and proximity to good schools, will generally command a higher price.
2. Investment potential: A great location can lead to significant appreciation in property value over time, making it an ideal choice for investors looking to flip or rent out a property.
3. Quality of life: Your surroundings play a crucial role in your overall quality of life. Choosing a property in a great location can enhance your lifestyle or that of your tenants through convenient access to amenities and services.
4. Resale potential: If you plan to hold the property long-term, selecting the right location from the start can increase its desirability to future buyers, leading to a faster sale and potentially higher sale price.
In my own real estate investing journey, I have made the mistake of overlooking the importance of location a couple of times. In both instances, I faced challenges in achieving my investment objectives because I ignored this cardinal rule. It serves as a reminder that location should always be a top consideration.
So, how much emphasis should you put on location when evaluating an investment opportunity? The answer is simple: a lot. Take the time to thoroughly research and consider the location of a property before making a decision. It could make all the difference in your real estate journey.
Remember, the old saying “location, location, location” is a timeless rule that we should all keep in mind when buying real estate. It’s a fundamental aspect of successful investing that can’t be ignored.
