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In Real Estate Investing, Does Location Really Matter?

The adage, location, location, location so commonly used in real estate can trace its roots back nearly 100 years. And, it’s a mantra that real estate agents still champion today as the single most important aspect in valuing a property.

But when it comes to evaluating commercial properties you may be considering in a DST investment, does location truly matter? As it turns out, location is very important and there are several factors you’ll want to consider when determining the best location for your investment property. Here are four key metrics you should explore.

1. Look for states with net population growth

Areas experiencing long-term population declines are at risk of continuing economic decline. Conversely, strong population growth can be a barometer of future and sustained economic expansion.

Currently, states with the highest net population growth include:
Colorado, Arizona, Texas, Florida, Washington, Utah

2. Look for states with no (or low) income taxes

States with little or no income taxes are often attractive for real estate investing because they are ripe for job creation and for keeping workers from moving to other states.

States with no income tax include:
Alaska, Florida, Nevada, South Dakota, Texas

3. Look for states with strong job and economic growth

As mentioned, the states experiencing strength in their job and economic sectors are generally those that stimulate their economies with growth-friendly policies like no state income tax.

According to The Motley Fool, states with the fastest growing economies include: Washington, Texas, Florida, Nevada, Alaska, Wyoming, South Dakota

4. Look for states with relatively low weather hazard probability

For obvious reasons, areas that are least prone to natural disasters like hurricanes, tornadoes, fire and flooding, are viewed as more stable from a real estate investment perspective.

According to worldatlas.com, states that are safest from natural disasters include:
Michigan, Minnesota, Illinois, Ohio, Maryland, Maine

It’s not just about the state, however, where your business property is located. You’ll want to look closely at submarket trends – cities, towns and neighborhoods – to assess how property values of comparable assets are likely to increase over a given holding period.

Ultimately, location is only one part of the investing puzzle, but it is an important one. It comes down to this: real estate is very local. You’ll want to focus on those properties that offer you the best chances of success with you investment, and in general, those are going to be properties where people want to live and work.

For more information, contact us

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Paul Getty

Paul Getty is a licensed real estate broker in the state of California and Texas and has been directly involved in commercial transactions totaling over $2 billion on assets throughout the United States. His experience spans all major asset classes including retail, office, multifamily, and student and senior housing. Paul Getty’s transaction experience includes buy and sell side representation, sourcing, and structuring of debt and equity, work-outs, and asset and property management. He has worked closely with nationally prominent real estate brokerage and investment organizations including Marcus Millichap, CB Richard Ellis, JP Morgan, and Morgan Stanley among others on the firm’s numerous transactions. Paul Getty also maintains a broad network of active buyers and sellers of commercial real estate including lenders, institutions, family office managers, and high net worth individuals.

Prior to founding First Guardian Group/FGG1031, Paul Getty was a founder and CEO of Venture Navigation, a boutique investment banking firm specializing in structuring equity investments made by institutions and high net worth individuals. He possesses over 25 years of comprehensive worldwide business management experience in environments ranging from early phase start-ups to multi-billion-dollar corporations. His track record includes participation in IPOs and successful M&A activity that has resulted in investor returns of over $700M.

Paul Getty holds an MBA in Finance from the University of Michigan, graduating with honors, and a Bachelor’s Degree in Chemistry from Wayne State University. He is a member of the Institute of Real Estate Management (IREM), a Certified Property Manager Candidate (CPM), and a member of the US Green Building Council. Paul Getty holds Series 22, 62, and 63 securities licenses and is a registered representative with LightPath Capital Inc, member FINRA /SIPC.

Paul Getty is a noted speaker, author, and actively lectures on investments and sales and management related topics. He is the author of The 12 Magic Slides, Regulation A+: How the JOBS Act Creates Opportunities for Entrepreneurs and Investors, and Tax Deferral Strategies Utilizing the Delaware Statutory Trust (DST), available on Amazon and other retail outlets.

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