Predicting Long Term Real Estate Appreciation: Geography Demography Stability
February 7th, 2012 | 
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Predicting Long Term Real Estate Appreciation: Geography Demography Stability
If you’re a real estate investor your investing model has probably been shaken up with real estate values crashing and marketing time tripling. What to do? How to invest?
The solution that many real estate investors have come to is a long term relatively safenslow investing strategy through buying a rental property and signing a long term rental agreement. While there are still risks associated with this strategy over the long term real estate appreciates this current real estate depression won’t last forever and you can earn a decent cash flow each month in the meantime. We’ll take a look at a few predictors for long term appreciation both for real estate values and for rental income in any given area.
Water
If you’re like most of us you would probably like to live near water whether it’s the ocean a bay a lake a river or even a pond. People love waterfront or water view or water access property for fishing swimming boating and a million other ways to enjoy being near natural water. But there’s a finite supply of this type of property and an evergrowing population hungry for it which means it will only grow in value as the years go by. There is a caveat however: some property near water is extremely difficult to build on or insure or both. This effect may grow worse with time depending in large part on water table or water level changes possibly occurring through global climate change so be aware of these challenges before investing.
Population
Remember Macroeconomics 101 and answer me this: as population increases in a given area what happens to demand? Areas that experience strong population increases will appreciate faster than their slower peers so consider long term population projections when considering investments. Also consider that the fastest method of population growth is immigration so if you see a certain group of immigrants starting to sink roots in a specific neighborhood now might be a good time to buy in and sign a rental agreement.
Urban Planning
Few of us give urban planning the thought it deserves but the fact is that urban sprawl is absolutely disastrous for urban centers and older more established neighborhoods and local businesses. If an area allows unchecked development it means UNLIMITED supply increases for housing which means your property’s value is going nowhere but down. Look for areas with excellent urban planning where the local government has strong development regulations and a comprehensive incentive program to restore older buildings and protect existing neighborhoods’ real estate values. These cities and towns will increase in value because they keep the wealth and development localized while other towns’ money and business spills out into the sprawling strip mall wasteland.
Stable Institutions and Employment Providers
Institutions that are large permanent and expanding create their own gravitational fields with residential and commercial areas orbiting them because so they employ so many people. Think of largescale military and government compounds medical facilities universities etc. Research their plans for long term growth and/or relocation look into where the employees like to live and commute from and consider finding an employee of that institution for a long term rental agreement in that neighborhood.
There other predictors for long term real estate and rental appreciation but hopefully you will start considering these and other long term geographic demographic and economic factors that affect real estate markets. Remember the big picture and happy investing!
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About the writer: Brian is a landlord real estate investor photographer film critic and regular contributor to EZ Landlord Forms a site that offers real estate investing articles a customizable rental agreement and other services for real estate investors including directories of real estate investment clubs and a landlord forum.
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