If you’re looking to make the most out of your real estate investment, buying in the right neighbourhood is critical.
Whether you're planning to live a while in the property or rent it out for some consistent income, the location will be the biggest draw for renters and buyers. The location will help your unit hold its value, make it easy to sell when you’re ready, and appreciate based on the area's supply/demand momentum.
Today we’ll drop some hints at what makes a location truly worth the investment.
It meets your criteria first
Would you want to live at this address? Does it have all the amenities you would want for yourself as a bachelor, young couple or new family?
Try to picture yourself in the unit, and see what would work for you in each of those lifestyle categories. Your ideals could be a lot of greenspace, playgrounds or schools nearby. Or, it could be immediate access to transit or the highway. For the youthful, it might be blocks and blocks of nightlife and entertainment options.
It’s by all the action
If the neighbourhood you’re looking at has both the upscale chains (think of big-name cafes or grocery stores) plus popular independent retailers, you can be sure that neighbourhood in particular is in demand and thriving.
The businesses nearby are signalling that the area is established or rising in affluence. Long-standing businesses and franchises won’t move in unless their market research shows promise, and you shouldn't either. Take the hint.
It’s bustling and walkable
If you’re doing some location scouting and notice that there are a bunch of people outside, young and old, enjoying their day, you can assume that people and parents feel safe in the neighbourhood.
If people are walking their dogs, chatting with neighbours and strolling around with their kids, it’s a good sign that the neighbourhood is flourishing and healthy -- people want to be outside!
If you can, you’re going to want to check out the area after dark as well. Are there people out and enjoying themselves? Make note of any differences to see if the neighbourhood is more of a daytime or nighttime destination, and yes, it can be both!
Obvious bus stops and transit access
You can tell you’re in a transit-friendly neighbourhood if you can notice bus stops at key intersections right away. Are there a lot of people waiting for the next ride, or only a few?
If you can easily catch a bus or streetcar to a subway, chances are your location will be attractive to a larger demographic of both buyers and renters.
If the commute is stressful and congesting, being rather distant from connecting routes, you may want to look elsewhere.
Cost to rent or buy
To make sure the place you’re looking at is in a hot location, you’ll want to compare the rents and home prices in adjacent neighbourhoods.
In Toronto, for example, two side-by-side neighbourhoods and their respective rents can tell you a lot about property value.
In Liberty Village, an area west of the downtown core but ripe with condo opportunities, rents go for upwards of $2,600 on average (according to StatsCan 2016). Parkdale, the next neighbourhood west, boasts an average rent of $2,000.
Using these two numbers, which are both pretty expensive, you can see that Liberty Village is in the throes of a hot, in-demand market while Parkdale is still hot, with the potential to climb. It's worthy to note that there are more condos in Liberty, while Parkdale has more rental options in traditional apartments, detached and semi-detached homes, plus a growing number of condos.
Where would you put your money for long-term growth? You might want to bet on what’s easier to purchase -- a condo -- if you're just starting out.
Shopping around for a house in an ideal neighbourhood is fun and dreamy, but make sure you’ve shopped around for mortgage pre-approval so you know exactly how much you can play with.