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Location, Location, Location

4/16/2018

 
By Brad Thomason, CPA​

​There was no shortage of details one could point to in observing that the two places were very different.  But the one that caught my attention, and really summed up the whole trip, was the price of the gasoline. 
 
I’d pulled into the service station just outside of Fort Lauderdale, and paid $2.97 a gallon.  Two days later, back in Birmingham, I filled up for $2.19.
 
We’ve all heard the old expression that the three most important factors in a real estate deal are location, location and location.  But even though we’ve all heard that, I wonder how often we lose sight of just how profound the differences can be.  The range of possibilities is, at times, far wider than would otherwise seem rational.
 
Two houses which look basically the same can be so different in terms of being an investment candidate that it boggles the mind.
 
I can’t explain why that happens, at least not all of the time.  Sometimes it’s because of a big difference in real estate tax rates.  Sometimes it’s because the cost of the land it’s sitting on is so different.  Or maybe it’s not even directly related, like the quality of area schools (whether real or simply perceived, and tied up in matters of social status).
 
But sometimes, it just is.
 
Which is fine.  Because ultimately, the why doesn’t matter.  Just because you can explain why you got mediocre results, it doesn’t make the mediocre results OK, right?
 
If the type of real estate deal you want to do doesn’t work in a particular area, it is almost always better to do it elsewhere, rather than try to force the local deal to fit the template you’ve decided it ought to have.  With no disrespect intended, you simply do not have the power to recast reality in that particular way.
 
So don’t try.
 
If the deal you want can’t be found where you are looking, change locations, or don’t do the deal.  It’s not like there are any real limits on the number of possible investments out there.  So don’t let yourself get lulled into volunteering for constraints which don’t exist, nor ignore factors which you can’t change, but can easily avoid.
 
At least that’s what I would tell you had you asked for my advice on that matter.

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  • Home
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