Location,Location,Location..How Do You Decide?
Hello,
Everyone involved in real estate has at one time or another heard the old adage "Location,Location,Location" . But how do you go about deciding where the best or ideal location for owning real estate is in your area?
Can anyone give me some advice about how this decision is made? Is it the same wether you are building an apartment building or buying rental property?
Thanks for any or all advice!!
Chris G[ Edited by sharpREI_PA on Date 07/12/2004 ]
Like most platitudes I don't think this one means much. All locations are potentially profitable-- if you buy right, manage right, develop right.
Location, Location makes good sense, but what about making your own location? Let me give you an example close to you so you can go look at it.
947 Liberty Lofts in downtown Pittsburgh. This is in Penn-Liberty Historic District. Your developer Eve Picker. Nice Aussy lady fought the powers that be to a standstill and check out what she erected. Steel and glass up a bit and you enter threw a patio of a small restaurant in front. Got a 20 foot setback so there is Patio Dining. To pull the eye off the street into the set back building she placed a bunch of very strange 15 foot high statues. They draw the eye alright! Skinny nothing lot, by passed by everybody. The building is only 18 feet wide. Loft like apartments above the crazy little specialty restaurant.
Remember this is in the Golden Triangle This is the triangle formed where the Allegheny and the Monongahela rivers converge to form the Ohio..
Now this is a sparker and has had an impact on the area already. This type of development is an incremental but essential step toward attracting a critical mass to make downtown bustle around the clock. This is only three units but oh my god a winner. I am jealous.
Lucius
At one time I had a very good friend (who has since passed away) who had been an urban planner, an architect, and a RAF WWII bomber pilot (among other things in a very interesting carreer that ended as a pub owner). John had been very influential as a developer/architect in a number of early urban renewal projects (for the Chicago buffs out there: Sandburg Village). John's take on this matter ran like this,
"You plan an urban renewal like you plan a military campaign. First thing you want to know is what territory your side already controlls. Then you want to know where the natural boundries are, (rivers, forests, mountains, Parks, major streets) then you want to figure out where your beachhead is going to be and how you are going to move the bad guys from the beach head to where you want them to go."
The rules are the same even when you are dealing with developments in the suburbs or out in the middle of the country. Where is the good neighborhood? What is the Path of Progress? How fast does it move? If you understand the uses and the sources then every site exists somewhere on that continuim.
Hope that is a more helpful answer than "it doesn't matter.
Taking a different view then the more commercial examples...
If you were sticking to residential, mostly SFR, then location is a large driver. School district, access to a park, amount of traffic, mass transit, etc are all factors that influence location. Crime rates also make a large difference.
If you were to stick to 'bread and butter' homes (more or less starter homes) if good areas with good schools you will not have a lot of trouble. Then find the lowest price home on the street or one that has some special problems (bad tenant, cosmetic problems). Some folks discount corner lots and others like them.
John
[addsig]
Well here's another location story, though its not terribly current. Not too long ago a fellow named Mark Beuabein owned a bunch of land not too far from here. It was mostly swamp and was described as a "mighty lonesome, wet place" Beuabien was something of a party animal and made most of his living running a tavern and a hotel. In his cajan accent he was reported to say, "I plays de fiddle like de debble, an I keeps hotel like hell." He frequently gave away land near his establishment to people he took a liking to just to try to get them to move in nearby.
A few years later the lots he gave away or bartered for saddles and bridles became immensely valuable. When asked about how it was that he had given away some of the most expensive land in what became downtown Chicago he replied,"Didn't expect no town".
That location thing can frequently be hard to figure out.
commercialking,
I wonder how many buyers he would have gotten at the time if he had tried to sell, rather than give away, the land. How many years elapsed between the time he gave the properties away and their becoming valuable?
Nancy
Nancy,
Only a few but you are correct that part of what made the land valuable was the people who moved onto it as a result of his generosity.
Reminds me of yet another location building story. When I was but a lad a farmer down the road sold 100 acres of his farm for $500 an acre at a time when EVERYBODY knew it was worth at least $1,500. We laughed at his stupidity.
The developer he sold it to built a regional shopping mall on it.
The farmer sold the rest of his 1,000 acre farm at prices up to $50,000 per acre. We did not laugh at him quite so much after that.
I agree w/ commercialking in that at the right price, anything can make sense.
As for location location in silicon valley, there are some"universial truths". Land bought in the 60s in Saratoga was nice uppermiddle class, and despite several miny dips, it has come bas a strong as ever.
and The feeling that this will continue, unlike san jose or campbell next door.
panche', good schools, access to good jobs.
commercialking,
Smart farmer! Become a developer (enhance value) by selling, not buying.