The Best States for Property Investment
Figuring out where to put your money so it can grow can be a difficult decision. Few choices have the long-term benefit of investing in property. If you’re entering the world of property investment as a novice buying their first unit or home, knowing where to buy is very tricky. Of course, even seasoned real estate investors need to stay up on trends and constantly evaluate data to determine where to buy. Use this guide to learn more about the best states for property investment. Even more important than finding out about booming states, you’ll learn what criteria you must evaluate before making any property purchase.
Know Your Intent Before You Buy
Investing in property is a great way to generate passive income that can help you save for retirement, pay for college and generally allow you to live a higher quality of life. There are a variety of different ways you can invest in property though, and they each come with their own benefits and headaches.
Before you start shopping for property, consider what type of holdings you want to have. Do you want rental units that generate income each month? Are you okay with the long-term commitment and management you’ll need to make these investments truly profitable?
Perhaps you’d prefer to buy and flip homes for a profit. Are you willing and able to do the renovation work? Will you buy one property at a time, or will you work on several at once to maximize your earnings in a hot market?
Sit down and seriously consider your options before investment in property of any type. You may find that one type of property, whether that’s residential apartments, single family homes or seasonal rentals match up better with your goals and overall desires.
Essential Figures for Property Investors
Making smart investments starts with doing research and collecting solid data. Here’s some of the information you’ll need to evaluate an out-of-state market:
• Average home price. Compare this to the national average and consider both population and employment growth when evaluating potential long-term gains.
• Average per unit rental price. This is must-have information if you’re considering rental property.
• Population growth. A growing population means more need for housing. Take note of population growth by age group to get a better read on what kind of housing may be viable.
• Employment growth. This information is relevant related to potential need for homes and rental units. Surging economies tend to support higher sales and rental prices.
• Median income. Median income information may help you determine what kind of housing is most needed in a particular state.
• Property taxes. As a property owner, you’ll need to pay annual taxes. Some states offer better property tax rates than others.
Compare state-wide figures to national averages. This can help you set a benchmark for evaluating performance in states across the country.
The Best States for Property Investment in 2020
Looking for a list of attractive states for investors? Here are some of the top states for property investment in 2020:
- Nevada, Texas and Florida are in the top three when it comes to rising sale prices.
- Louisiana, Hawaii and Alabama offer the lowest property tax rates.
- Ohio and California top the market for housing demand.
- Minnesota, California and Florida have a hot apartment rental market.
- West Virginia, Iowa and Ohio are top Airbnb and VRBO performers.
- North Carolina, Arizona and Washington have high population growth.
Consider Staying Close to Home
Buying rental property or finding a home you can flip out of state can seem easy if you’ve done your homework. The price is right, the state is booming and you think you’ll have renters or buyers lined up out the door. Data is only part of the equation though, and in some cases, it can be misleading.
Purchasing property out-of-state means buying in an area that you’re unfamiliar with. You’ve collected the data, but not everything is reflected in that information. For example, a neighborhood that looks lovely from the outside may be in a “rebuilding” or “rebranding” area.
This is particularly common in suburban areas that are part of major metropolitan cities where parts of a neighborhood are given new names to boost real estate prices. People who have lived in the area for a long time have a deeper familiarity with those neighborhoods and their past though.
How can you avoid making this mistake? Buying close to home, at least until you have a firm grasp on your style of property investing, can help. By buying near your home you’ll be able to visit your property more, learn the neighborhoods better and truly get a feel for the market.
If you choose a state that’s across the country your visits will likely be rare.
Use Out-of-State Advisors
Shopping for property out-of-state can mean costly trips to far-flung locales. These trips might not pan out, forcing you to spend money without anything to show. Even fruitful out-of-state visits may not provide enough information for you to pull the trigger on an investment property.
Using out-of-state advisors can be helpful here. A real estate agent that understands your goals is a great team member to have. Investment advisors can also help clarify data and steer you in the right direction or away from potentially problematic property purchases.
Rental units can also greatly benefit from having a property manager. A skilled, knowledgeable property manager can ensure that your homes or apartments stay occupied while handling day-to-day tasks like rent collection, evictions and maintenance.
Property investment can help you set up a sound financial future for yourself and your family. As a business, it can be a lucrative one. Buying out-of-state can help you take advantage of thriving or growing markets, but it does pose unique challenges compared to investing in your home area.
Partnering with BuildDirect
At BuildDirect, we’re not real estate pros. What we are is building and renovation professionals with years of industry-leading experience. Whether you’re retrofitting a commercial space, updating a single-family home or creating dream condominiums, we can help you get the materials you need on-time and on-budget.
Reach out to our trained professionals today to learn more about how we can guide you and explain your options when choosing from an assortment of materials like flooring, wall finishings, decking, siding and more. We can also help with logistics if you’re shipping materials to a job site out of state.