Know the best locations for your home

The old saying, “Location, location, location” is more like a mantra when it comes to real estate. Buy in the wrong one and you could be setting yourself up for financial ruin. Or at least an unhappy experience. Right?

In some cases, yes. But also, maybe not so much. Let’s get into it.

The argument for buying in the best location you can afford

You can change your home, adding, updating, and renovating down to the last square foot. What you can’t change is where it’s located. Add in an inherent desire to build equity when you buy a home, and it’s not surprising that real estate experts often recommend buying not only in the best location you can afford, but, if given a choice, buying the worst house in the best neighborhood instead of the other way around.

“A home is an investment – and the best investments have the most room for improvement,” said Realtor.com. “Ideally, you’ll be adding to the home during your ownership, building equity in hopes of a payoff when you (eventually) sell. Brendon DeSimone, author of “Next Generation Real Estate,” told them. “You can add value on your own. If you’re choosing between an awesome house in a crappy location or an awful house in a great location, I would choose the latter.”

Multiple recent studies bolstered the idea of buying in the best location you can, but identified new factors for determining location-worthiness. Namely, you need to buy a home with a Starbucks nearby. Or a Target nearby. Ideally, both.

“Among homeowners who sold in 2015, those near a Target saw an average 27 percent increase in home price since they purchased their home, which equates to an average price gain of $65,569,” said the Washington Post.

As for Starbucks, “Between 1997 and 2014, homes within walking distance, or one-quarter mile, of a Starbucks appreciated 96 percent,” said Forbes. “Compared to the national average for the same time period, 65 percent, it seems having a barista close by is a smart real estate move.”

Buying the house, not the neighborhood

Yes, buying in a neighborhood that seems to offer some cushion when it comes to values makes sense. But what if you fall in love with a house that’s not in your preferred neighborhood? What if it’s not in anyone’s preferred neighborhood?

The opportunity to buy a more affordable home can tempt people to take a chance on an iffy location. But how iffy is too iffy? The potential for losing money on a home that may not ever appreciate because of the neighborhood is only the beginning. Buying into an area that has higher crime can be dangerous to more than your finances.

Not sure what you’re getting yourself into? Here are a few ways to investigate the neighborhood:

  • Look at sales data – Beyond the safety issues, you want to know what you’re in for in terms of your investment. Just because a home in a questionable area is priced low doesn’t mean it’s a good value.
  • Check crime records – You’ll obviously want to pay attention to murder and violent crime rates, but also property crimes including break-ins, home robberies, and car thefts.
  • Check the sexual predator registry – That’s a given for any move.
  • Talk to neighbors and area business owners – Sometimes, the people that live and work there can provide the most telling information.
  • Consider the type of businesses in the neighborhood. Remind yourself about the Starbucks and Target value conversation. Those aren’t around? What’s in their place?

The quality of the businesses in the area can be one of the main determining factors when considering a neighborhood. A story from attn: asked the question, “Do Certain Businesses Attract Crime?” Their findings: “The prospect of a new liquor store or marijuana dispensary can spark safety concerns in some neighborhoods. But while the idea that particular businesses are crime magnets holds up in some cases, it’s not always true, and people’s concerns can be based on real evidence or flawed perception.”