Investors in real estate are always looking for hot markets. Where can they buy, and what can they buy, that will make them loads of money? It's not that difficult to figure out as long as you are willing and able to do away with the clichés and determine what makes up a “hot market.”
According to Ken McElroy, author of “The ABCs of Real Estate Investing”, a hot market is an area that has a high demand but a short supply. For example, if there is a piece of land on the riverfront that seems unattractive, but is capable of being, that may turn out to be a hot piece. Often, even highlyexperienced investors will be unable to see what is in front of their own eyes. If a property is overgrown, for instance, or needs cosmetic work, it might not up here to be much to someone who doesn't know what to look for. But the very fact that it is on the water, a place where people want to be, may make it worth looking closer at.
Another type of hot property, according to McElroy, is a unit with personality. He refers to the Venice Beach area of CA, which was featured in a movie called “Lords of Dogtown”. This is a tough, edgy spot full of surfers and skate boarders. It's “hip”, and the fact that someone lives there says to the world that they are funky, tough and artistic. If you can purchase a piece of property around there, there is instant draw, simply by virtue of the “cool” factor.
Not all locations have style, however. But they may have other things, like existing industry, or a big box retailer on the way. Big companies bring jobs and jobs bring people, who need homes to live in. If people are moving in from out of town, they are most likely feeling fairly positive-minded, looking forward to a new lifestyle in a new location with a shiny new job. Their optimism can work in your favor.
Military bases increase the population as well, and not all military people live on base, as McElroy. points out. He also warns, however, that real estate investors should be careful when counting on military bases, because government budget cuts occasionally mean the closing of these bases.
Good old “findability” can qualify a property as a “hot property”, or at least increase it’s “hotness” factor if it is in fact a advantageous place to live. Lots of drive-by traffic can be a positive thing. Drive-by traffic is free advertising. It also means that there are already plenty of people passing by the property, and probably that the rental unit(s) is on the way to work for a lot of commuters. Perhaps it would be a closer trip for some people, which is a good thing.
What it comes down to then, is that a hot market is property where the people are. If the area enjoys a big population, or is expecting an increase in that population, it means there is a good economy, and a good economy is what will maintain your investment property business.
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