Kailuabruddah, Have relatives that have and had a number of investment properties in several areas of some of the cities you list. One was and is doing extremely well with his investments (and this was well before the bubble too), while the other one made only a positive return that was negligible after deducting taxes, time, and costs.
Their strategies were the opposite from each other, so possibly there's a lesson here. The successful one, bought property in highly desirable areas, desirable not because they were trendy, but desirable because they were physically some of the closest apartment buildings to a destination a lot of people needed to be next to (a school), while the other one (in his unfortunate desire to invest only a small amount of money) bought one property in a location that was less desirable (thus less costly) as it was on the outskirt of town that required a bus ride for his tenants to/from school.
He correctly recognized the area needed more apartments to facilitate the growing school - and he was correct on this but he wrongly misjudged developers desire to simply build more units on the outskirts of town. So tenants eventually had a choice between his older apartments or the brand new ones. His competition was fierce as a result.
Meanwhile, the other relative was quite comfortable with his investments because there simply was no land, no vacant lots, nothing for any developer to build more next to the school. So, his properties drastically rose in appreciation well before the bubble even started, and he never had a supply problem with tenants because his location was extremely desirable.
In a nutshell, location made all the difference in the world between huge profits and negligible profits - even within the same city.
The successful investor also owned property in another one of the cities you mentioned, but again, he followed the same principle: he paid more money to buy property in a desirable location. The key here is to buy in a desirable location from the standpoint of a physical limitation and closeness proximity, not from the standpoint of trendiness. Trends come and go, but physical limits tend to stand the challenges of time.
In many towns, the outskirts provide the fresh new buildings and so attract new growth, but outskirts so easily get diluted by new units due to unlimited sprawl. But what was tried and true for the successful investor was the more expensive investments next to desirable locations with the limitations of new buildings and desire for proximity. You pay for what you get.
Regards,
Amy J |
