WHY FOLLOWING THE PATH OF PROGRESS IS IMPORTANT FOR REAL ESTATE INVESTORS
Following the path of progress is essentially making an educated guess about investment appreciation in the future. It’s important for real estate investors because it allows investors to get an edge on neighborhoods or emerging markets with properties that will appreciate in the future, making good, cash-flowing investments into great ones.
The goal is to identify these markets before they reach their peaks.
While no one can 100% predict the long-term positive fiscal performance of any geographical area, there are several indicators of geographical areas that may be on the path of progress. We will discuss some of them below.
JOB MARKETS IN THE PATH OF PROGRESS
Look for areas where well-known, larger retailers are either already operating or plan to operate in the future. Specifically, larger retailers such as Costco and Whole Foods conduct extensive research before moving into a new area. As such, you can piggyback off these retailer’s research to help with your own investment decisions.
For example, in Lake Nona, a planned community in Orlando, Florida, the Lake Nona Medical City expansion has spearheaded growth in the area. Together with the expansion of the medical center, it has attracted the attention of a slew of medical students and professionals as well as many affluent homeowners, all of which make Lake Nona a solid emerging market in Central Florida.
FAVORABLE HOUSING MARKET FOR INVESTORS
As a multifamily apartment real estate investor, having property located in an attractive renter’s market is ideal. Specifically, Orlando, as the 4th largest city in Florida, is one of the best places to purchase multifamily rental properties in 2021. This is based upon affordability, cash flow, growing job market, and population growth.
EVALUATE THE LOCAL ZONING ON THE PATH OF PROGRESS
Zoning is one of the most important factors in determining whether an investment is located on the path to progress. Specifically, zoning is used by the government to plan future infrastructure within communities to maximize the effect of public transportation and land value.
Zoning is especially important to consider because there is not much you can do in the short term. Before you plan a development project or invest in real estate anywhere in the country, you need the proper permits, licenses, and regulations. Regulations vary from one sector to another.
PUBLIC INFRASTRUCTURE
Highways and public transportation are critical to emerging markets on the path of progress. Specifically, high traffic and new roads being built or redeveloped is a good sign that you are dealing with an emerging market.
WHEN SHOULD YOU PURCHASE PROPERTY?
The decision on when to purchase in your chosen market will mainly be dependent upon your risk tolerance. Keep in mind that the path on progress can always change course and never fully develop into a flourishing market. However, as discussed previously, you cannot wait too long before purchasing into a market (the property must cash flow now). This is because you run the risk of the market becoming over-saturated, and the price inflating beyond its true value.
FINAL THOUGHTS
Overall, following the path of progress is just one strategy that real estate investors use to identify strong investment opportunities. No method is bulletproof. You have to figure out which one works best for you and the risk tolerance of your real estate portfolio. In the end, know and understand the reason why you became a real estate investor. Know your greater purpose and goals, and always stick with it.
ABOUT THE AUTHOR
Ismael “Rey” Reyes has been actively investing in residential real estate since 2005 and has focused exclusively on multifamily since 2016. He has led MI Real Estate in investing in 13 multifamily properties in Alabama, Florida, Georgia, and Tennessee, totaling 599 units and valued at over $38 million. Rey also provides independent consulting to multifamily investors and is the international bestselling author of