Investment property seekers are always searching hot markets. Where can they purchase, and what can be purchased, that will make them loads of money? It's not that difficult to discover as long as you are able to do away with the clichés and determine what constitutes 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 water that seems unattractive, but is able to be developed, that may turn out to be a hot piece. Often, even experienced people will be unable to see what is in front of their own eyes. If an investment property is overgrown, for instance, or needs a facelift, it might not up here to be much to someone who is not paying attention. But the very fact that it is on the water, a place where people want to be, makes it worth looking closer at.
Another kind of of hot property, according to McElroy, is a place with persona. He refers to the Venice Beach area in California, 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 a person lives there says to everyone else that they are hip, tough and possibly talented. If you can buy a piece of property in that area, there is instant draw, simply by virtue of the “cool” factor.
Not all areas have persona, however. But they may have other things, like existing industry, or a big box retailer on the way. Corporations bring jobs and jobs bring more people, who need homes to live in. If people are coming in from another city, they are most likely feeling pretty optimistic, looking forward to a new lifestyle in a new location with a happy new job. Their optimism can work in the investor’s favor.
Military bases draw a lot of people as well, and not all military people live on base, as McElroy. points out. He also cautions, however, that investors should be cautious when banking on military bases, as military budget cuts occasionally mean the closing of such facilities.
Good old “findability” can qualify a property as hot, or at least up it’s “hotness” factor if it is in fact a advantageous place to live. Lots of drive-by traffic can be a good thing. Drive-by traffic is free advertising. It also means that there are already plenty of people around the property, and typically means that the property is on the way to work for a lot of people. Maybe it would be a closer journey for some people, which is a helpful thing.
What it boils down to then, is that a hot market is property where people are. If the area has a large population, or is looking forward to an increase in that population, it means there is a good economy, and a good economy is what will support your investment property business.
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