When investing in property, location is everything and can greatly impact your success. However, the factors determining an area’s success apply to the local level, not the state level. Keep reading to learn some state factors that can determine your success in real estate if you want to know whether your state’s residential or commercial offerings are good investments.
Population Growth and Size
It seems obvious—the larger the population, the more people are looking for a home, which increases the investment pool, right? Statistically speaking, this is partially true. A large population size is a good indicator of a successful economy. However, just because the population is large doesn’t always mean the economy is doing well. It could have been better in the past, but if people aren’t moving because they can’t afford to, that’s not good either.
You want to compare population growth with how many people migrate to the state. If you see a positive trend of migrators, most are likely moving to the state for job opportunities. As you may already know, more job opportunities equals more economic success, and the more economically successful a state is, the more money its inhabitants have to spend.
Overall Economic Success
Aside from migration and job opportunities, you can determine a state’s economic success using other methods, as the previously mentioned factors aren’t always enough. One of the most comprehensive methods that help determine a state’s economic success is its per capita gross domestic product (GDP). Per capita GDP is the overall output of goods and services divided by population. Fortunately, you don’t have to worry about doing the math, as plenty of websites will tell you exactly what your state’s GDP is—the higher, the better.
House Pricing
So, you determined that population size is robust, people are migrating and looking for jobs, and the overall economy is successful; now what? Your next step is to review the state’s overall house pricing and affordability. We know that people are migrating to the state, which means they can afford housing to some degree, so why does this matter? Knowing the state’s house pricing helps you determine not only if other people can afford a home in the area but if you can afford to buy there. Of course, if the prices aren’t in your budget, then you shouldn’t invest, but there’s more to it than that.
Let’s say the market is stable, and housing prices are fair but expensive. You may be able to afford one property, but the price-to-rent ratio isn’t so good. You may not make enough positive cash flow to maintain a property to the area’s standards or diversify your portfolio and invest in other properties. Making investments gets even harder if the market is unstable.
It’s true that your state can determine your overall success in real estate, but, ultimately, you have to know what to look for to answer this question fully. If you have further questions regarding increasing your chances of real estate success or need help managing your property, contact Excalibur Homes today. We’re a Georgia leasing & property management company with trained and experienced property managers determined to help you succeed.
