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WHERE IN THE COUNTRY IS IT BEST TO INVEST?
Properties that meet the needs of the local tenants and are located in areas where demand exceeds supply are best positioned to be successful investments. Job creation and population growth are key demand elements in real estate. Understanding where these elements are currently and where they are trending are key to successful investing.
Statistical projections of the fastest growing counties through 2020 put 23 in the West and 18 in the South. Population and job growth in the South are just behind the West. States like Texas are benefiting from corporate relocations and new energy-related jobs. The Midwest is growing more slowly, at about half the rate of the South and the West. The Northeast enjoys the strongest per capita income growth in the nation.
The exceptions to slower growth in the Midwest are Minnesota and Missouri. Both these states match national growth trends. Only two Midwest counties are in the top 50 growth counties and both of those are in the Chicago area.
In the West the states of Washington, Nevada and Arizona represent some of the fastest growing economies in the country. California is growing less rapidly but offers a more diverse economy.
For real estate investors lower growth areas can translate to steady predicable cash flows while the highly appreciating areas tend to provide less short term cash flow and greater long term appreciation potential. For many investors a balance between good cash flow and appreciation potential can be found in numerous pockets throughout the country.
It is important to understand the local supply/demand drivers of the specific locations the for potential investment. Long term natural restraints on supply (example, shortage of build-able land and restrictive building codes) coupled with population and job growth are strong indicators of a successful investment opportunity.
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