The Only Criteria That Matters In Real Estate Investing

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All real estate is local. Sure, you can compile data and try to see if there are any big picture trends. But if prices in your neighborhood are going down while prices in some city across the country (or state) are going up, “national” numbers don’t matter. 

Here’s the quickest way to understand just how local real estate is: Scroll through Google News headlines. These were the first three headlines I saw when I searched for real estate prices:

The more you read — and the more you research — one thing becomes clear. The only thing that counts is what’s going on where you’re living — or investing.

The macro trend of housing prices is easy to explain. Mortgage rates are up. That makes it more expensive for non-cash buyers to buy a house. Some of those buyers aren’t entering the market. Others can’t afford to buy as much as they could previously. That means sellers aren’t receiving tons of offers on their homes. So they’re lowering prices to sell them.

But in many markets, prices are staying the same or even going up. That’s because the supply of available housing is scarce. Most potential sellers are sitting on mortgages with extremely low interest rates. They’re not eager to buy a new home with a higher mortgage rate.

So instead of selling their homes and moving on to new ones, potential sellers are sitting out. Fewer buyers combined with even fewer sellers leads to prices either holding steady or going up depending on the region.

For investors, this means that real estate can still be a good play — even with prices “falling nationally.” The key is understanding the market that you’re investing into. So as you peruse Arrived, Fundrise, and other real estate crowdfunding investment portals, remember that your due diligence process has to extend well beyond the investment terms you see on those sites.

Investigating the market you’re investing into is more important now than ever before. So take the time to do the research. And if everything checks out, go ahead and invest. Real estate can be profitable if you know where to invest.

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