Editors' pick: Originally published Nov. 18.
Determining what markets are ripe for the next real estate investment can be a daunting task.
One of the most important factors is to identify a market that has a significant gap between supply and demand. Once an investor has identified a market that fits that description, it is important to look at both the micro and macro factors that are driving that demand.
Doing due diligence before making an investment is critical to the overall success that can be achieved, and real estate is no exception.
Let's take a look at four important factors to consider before deciding where to make the next real estate purchase.
It is important to take a look outside one's local market to make the best possible real estate investment decision. The economy of the market being considered is the most important factor to consider.
A diversified economy that doesn't rely on just one to two industries leads to stable growth and makes for a much more appealing market.
Looking for trends indicating a growing economy is the first step. To do this from a macro standpoint, look at the year-over-year growth in gross domestic product of a state.
Once a growing economy is identified, drill down into more specific data such as whether the area is investing in infrastructure, is business friendly, and has a low or no state income tax.
"This is typically a good sign [of] long-term growth prospects in the market and a healthy economy" said Sean Ryan, chief executive and founder of Greystone Residential.
Some particularly interesting markets that meet these criteria include Charlotte, N.C., and Dallas.