Buying Real Estate or investing in Real Estate it’s more than looking at a beautiful house. Now it is time for you to ask yourself, “Do I want to deal with long time renters or do I want to manage seasonal renters? What exactly is it that I am looking forward to doing?”.
Having an amount of money like $500.000 in your hands will change your acquisition power depending on where you are. If you are in a city like New York City, you will soon find out that it’s not enough to get you much.
If you’re in an area in Pennsylvania, like Lake Harmony, then you’re going to realize that, “Maybe I can get away with a lot more space.” But even if you have more space is that still enough, is that something you still want to add to your rental portfolio when you’re investing in Real Estate?
With $500.000 in New York, you can get, on average, a one-bedroom or a two-bedroom apartment. If you are in the middle of New York City you are pretty much close to everything. Let’s say you decide to invest in an apartment in New York City, what do you think are the selling points that someone might want to look at when it comes to investing in Real Estate or renting your property?
Investing in Real Estate: Selling Points
When people buy or rent a property, they want to be close to their jobs, at least relatively close. They want to be close to shops, restaurants and places where they can hang out with their close friends. They want to go to clubs as well, they want to have a good decent social life. Also, how can they get their basic necessities taken care of? We’re talking about proximity to pharmacy, to a supermarket, all of that is factored into account.
As you know New York City is somewhat overpopulated for lack of a better term and everybody wants to live in New York City. Everybody wants to be there so the competition, the demand will drive the prices of the rentals up. Which also means that the price of the properties that you’re planning to invest on also goes up a lot. A property of a $500.000 will only get you, if you’re lucky, a one-bedroom or a two-bedroom apartment.
If you go somewhere else like Lake Harmony, you will find big houses with that same amount. We’re talking about a kind of house that would have 16 beds, for example. These houses in smaller towns or cities than New York could even have spaces to socialize. Other areas these houses include are:
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- Areas to hang out
- Video games rooms
- Barbecue area
- Multiple bedrooms
- Living rooms
- Backyard
That, in New York City, would actually come to you with a premium. To be able to find a house with these characteristics, you have to take a couple of things into consideration:
1) Jobs
What are the jobs like out there? Are we talking about regular jobs or are we talking about well-paid jobs? People who can actually afford this type of property out there. Will these kinds of jobs be flexible enough to allow them the opportunity to actually work from home in that nice big house without having to worry about the commute?
2) Tourism
If you decide to rent it out at some point to people that have a lot of money and money’s not an issue and then they want to just stay for months at a time. Even if they do, how do you draw their attention? There has to be a selling point other than clubs and restaurants. Maybe touristic places. Something that makes them want to go there and enjoy some nice quality time.
Investing in Real Estate: Selling Points of Lake Harmony
What are the selling points of an area like Lake Harmony? Obviously, you have Lake Harmony and that means a lot of nature surrounding the whole town. There’s a beach, there is an area where you can go hiking, you can go fishing, and it’s 10 to 15 minutes close to a big Resort where you can go skiing, snowboarding, and snow tubing. Hershey Park is nearby the town, you have outlets where you can actually do lots and lots of shopping at a much more affordable rate.
In the event that you want to do some beer sampling and go out with your friends and have some fun then you can go and check that out. Now you can see you can get to compare the two properties. A $500.000 one to two-bedroom apartment versus a 16-bed house out of New York City, in this case comparing it with Lake Harmony in Pennsylvania.
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Investing in Real Estate: Ask yourself
You have to ask yourself what’s the maintenance going to be like? How do I maintain or how do I even manage a property like this?
You have to ask yourself, “What’s the right investment for me?” Do I want to sign a year-long contract in New York City and then hopefully collect my rent every single month and let it be the end of it? Or do you not mind having your properties sitting out there for weeks at a time vacant, sometimes even months, but know that you’re going to have to do a lot of marketing on times that are considered to be high season?
Which one it’s more ideal for you? Do you want to do it in a more active way through Airbnb and then just simply interacting with your renters from time to time or do you just want a one-year-long contract and hopefully not have to chase that person every single month? Because hopefully you did a very thorough investigation and a thorough review or a background check on the person and now you can rest assured that you will receive the rent.
You have to understand that your purchasing power will change depending on the area that you decide to invest. Whether it’s in New York City, Pennsylvania, even New Jersey or California. You can get something as long as you know exactly what you want and how to market it to be profitable for you. It’s not about just simply taking a $500 thousand dollars and just buying any single random home where you are envisioning yourself living in.
This is not about you, this is about the rentals. This is about the person who is going to be willing to rent your property. You have to put yourself in their shoes and think about how to make that an unforgettable experience. Investing in Real Estate is about taking the best decisions for you and your money.
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