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Location, Location, Location versus Deal, Deal, Deal.



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By : Andrew Waite    99 or more times read
For some illogical reason real estate agents define investors as a different class of buyer than a typical home buyer. In general they are in terms of process, but not the ultimate objective of buying a house that is ultimately salable or immediately marketable as a rental.

Just because a house is cheap it does not mean it is a deal. This is a frequent error made by real estate agents, new investors and banks selling distressed properties. An astute investor is going "to pick the eyes" out of a market, avoid laggard neighborhoods and pay more for a home that will, by nature of location, attract a better tenant, higher rent and experience a lower vacancy rate. All the makings of a long term hold.

Any securities analyst (and there are probably not many of these left) will analyze an investment by looking at company fundamentals and technicals and the industry they are in to determine financial performance of the company and the industry market dynamics.

We believe this is a great start for an analysis model in buying a well located real estate investment. We go further and add Culturals and Personals as a home is more than a commodity:

Fundamentals: - financial performance and values of the house,

Technicals: Financial dynamics of this neighborhood compared to similar and other neighborhoods.

Culturals: the style of life surrounding this home and neighborhood as matching the buyer or prospective tenants?

Personals: the preferences of a specific family and those falling into a similar demographic.

Think of a scatter chart used following the Gartner Magic Quadrant used by a typical business to score features, benefits and total cost of ownership for a capital goods acquisition like plant equipment or a business system.

It is no accident that investment properties in remote neighborhoods have seen the greatest losses in value because of their marginal desirability versus central and more rentable neighborhoods.
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