Understanding how location affects price and the importance of purchasing a building within a geographic location that is within a comfortable distance from you is paramount. Many first-time investors plan to do at least some of their property management themselves, and you the investor need to be comfortable with the location and the distance from your home.
Location can also determine the type of neighbourhoods available to you based on price and the tenant profile desired. As a good example take the city of Hamilton and with little guided effort you will quickly learn there are four or five very distinct areas/markets in the City of Hamilton. This can be defined as micro markets versus macro markets. From a bird’s eye point of view, Hamilton looks quite different depending on your view. This will be true of all macro markets within a defined area.
These distinct markets vary widely in age of buildings, condition, tenant profile and price per door making it extra important to understand each market before investing.
It is important to understand any neighbourhood you may be contemplating purchasing in and to fully understand the Micro and Marco Markets and how moving down the street a few blogs may change the quality of the tenant profile and the value of the real estate. On the other hand, some areas may offer a lower price per door and an opportunity to purchase more doors while offering an endless supply of tenants as the area may have many renters due to basic demographics. As an entrepreneur and investor, you want to work with as many people as possible and don’t limit yourself to one market unless there is good reason within your strategy.