What Makes A Market "hot"?

Real estate investors are always looking for the hottest markets. Where can they purchase, and what can they buy, that will make them though most money? It's not that complicated to discover as long as you are willing to get rid of the clichés and determine what constitutes a truly “hot market.”

According to Ken McElroy, author of “The ABCs of Real Estate Investing”, a hot market is something that is in short supply and high demand. For example, if there is a piece of land on the riverfront that seems unattractive, but is capable of being, that may be a piece of hot property. Often, even experienced people will be unable to recognize what is in front of their own eyes. If an investment property is deteriorated, for instance, or needs cosmetic work, it may not look like much to someone who doesn't know what to look for. But the very fact that it is on the water, a place where people want to be, may make it worth having.

Another type of hot property, according to McElroy, is a place with persona. He mentions the Venice Beach area of 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 cool, and the fact that someone lives there says to the world that they are hip, tough and artistic. If you can buy a piece of property around there, there is instant interest, 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 people, who need homes to live in. If people are moving in from another city, they are most likely feeling fairly positive-minded, looking forward to a new life in a new town with a shiny new job. Their optimism can work in your favor.

Military bases are great population draws as well, and not all military people live on base, as McElroy. points out. He also cautions, however, that investors should be cautious when counting on military bases, because government budget cuts can occasionally mean the closing of these bases.

Good old visibility can also qualify a property as a “hot property”, or at least up it’s “hotness” factor if it is indeed a desirable place to reside. Lots of drive-by traffic can be a positive thing. Drive-by traffic is free advertising. It also means that there are already plenty of people passing by the property, and typically means that the property is on the way to work for a lot of commuters. Perhaps it would be a closer trip for some people, which is a helpful thing.

What it comes down to then, is that a hot market is property where the people are. If the area has a large population, or is expecting an increase in that population, that means there is a good economy, and a good economy is what will maintain your real estate investment business.

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Alex Anderson Specializes In Selling MN Real Estate And Minnesota Investment Properties. Visit Her Website For A Free Copy Of "The Investors' Rental Guide" At www.GreatInvestmentProperty.com

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