A common question among investors is where to invest in real estate.
It can be very difficult to decide especially if you don’t know what you are looking for. In this post, I’ll share with you the single biggest factor to consider when deciding where to invest in real estate.
It’s really just 3 words.
#1 Rule in Real Estate Investing
Location. Location. Location.
It’s the #1 rule in real estate investing.
You can repair a house or repaint it to increase its value. You can add a room, add another story or fix the landscaping.
But you can’t fix the neighborhood. And you can’t change the amenities or widen the roads. Also, you have no way to control the crime rate, the traffic situation or the pesky neighbor who’s always gossiping about your other neighbors.
Accept that you can’t change airplane routes, tidal patterns and you can’t move fault lines.
It is what it is now.
That’s why location is very important and also the #1 criteria in my book, No Money Down Formula.
But what do you look for in a Location? How do you know if it will appreciate?
The answer is found in another set of 3 words.
Single Biggest Reason For Rapid Appreciation
So, where to invest in real estate? Invest in the Path of Progress.
If you buy in the path of progress, you will make money. It’s that simple.
What does path of progress mean? Why does real estate appreciate in the path of progress?
The path of progress is the direction of real estate development. Look where the government is building infrastructure – highways, bridges, roads, railways, airports, city halls, town plazas and the like. See where the big developers are building subdivisions and condominium complexes. Consider where businesses are building shopping malls, commercial centers, factories, BPO buildings and the like.
Therefore, look for the focal points or the centers of development. These focal points are where people or businesses converge.
For example, a city hall is a focal point because people flock to the city hall for most local government services. A huge mall is another focal point for commercial and retail activities. A business district is another focal point for business activity and jobs creation.
Thus, the closer you are to a focal point, the higher the potential property value in the future.
Direction of Rapid Appreciation
Once you determine a focal point, determine the direction of development. Development occurs in two directions.
First, from a focal point, the path of progress will develop outwards so all properties surrounding a focal point will rise rapidly in value. It happens over time as population increases and economic activity increases. Notice how Metro Manila is expanding outwards into the surrounding towns and provinces.
Second, follow the paths that connect these focal points. Trace the connecting highways and roads. Development will occur along these busy roads as traffic increases.
Also, look for crossroads. The intersections of these connecting roads and highways will also become focal points if they’re not yet one.
Let’s have an example.
An Investment Gem in the South
The Alabang area in the south is a good example of an investment gem. It’s also an example of great foresight and investment patience.
Alabang is the doorway to Southern Luzon in Metro Manila. It’s at the cross roads of the National Highway from Laguna, the South Luzon Expressway and Alabang-Zapote Road.
It used to be all cogon grass. It was said that when the Ayala group bought land in Alabang, they had the long-term vison that the area will grow as a major focal point in the south. That vision is validated now.
In the early 1990’s, Alabang Town Center was just a small building with a few cinemas. Festival Mall was not yet built. Filinvest City was probably still in the planning stages. The biggest thing I can remember in Alabang is Big Bang sa Alabang, the big Christmas Carnival setup in the South. The Filinvest and Ayala groups are two of the biggest and prominent owners in that area at that time. Now, they are joined by Vista Land and Megaworld.
According to Cuervo Appraisers, the south is bound to continue growing rapidly until 2019 as more money is being poured into the area.
Alabang benefitted from the SLEX, Skyway and Daang-Hari projects. The influx of BPOs and other businesses in Filinvest City and Madrigal Business Park created more jobs for people in the surrounding areas.
Alabang and it’s surrounding areas will continue to grow over the years as more businesses move there.
In conclusion, you don’t have to hope and pray that your real estate investment will grow. With investments spread out in a lot of key areas across the Philippines, there are many places to choose from.
By choosing the proper location, investing in the path of progress and thinking long-term, you can be assured of significant capital gains in the future.
In the comments section below, what area do you think will be the next big thing in real estate?