Location is one of these hotly contentious topics that either send residents running or competing against one another for a property. Naturally, then, location should be at the forefront of any house hunter’s mind. It is the most crucial factor when purchasing investment properties.
Think about it, when a Member searches for a room or home, the first thing they will type into the search bar is their desired location. The closer they are to their work, shops, and amenities could be the difference between tedious commutes and a 10-minute walk.
In our highly competitive real estate market, we want to solve the location issue by factoring the impermanence of the desired location into our business strategy. Turnover rates remain sky-high, meaning that a large portion of workers face the prospect of living a quasi-itinerant lifestyle.
When purchasing a property you intend to turn into a co-living space, Hosts need to look further afield than location as well. Ultimately, there are a few approaches Hosts can take when searching for the ideal rental location. Here are some factors to consider when choosing the best location for your PadSplit investment property:
Renters are different from owners
This is obvious but often overlooked. Home Price Appreciation (HPA) is a boon to owners, but it’s a threat to renters. A neighborhood about to “turn the corner” is of little use to a renter who is planning on being there for a year — they’re living on this side of the corner.
We already know that location is important in most Members’ minds but what’s second? The simple answer is price. If a person can’t afford to rent a specific property, then that’s the bottom line. There’s simply no way around it unless the landlord is willing to compromise. It’s important to keep location and potential pricing in mind when purchasing your property. Browse PadSplit to see what available rooms are renting for in that area, and do the math to make sure the purchase price will make sense for your financials.
Flexibility is valuable — especially for low-income workers
The average job turnover for custodians is 200% annually, and the annual turnover for restaurant workers is 73%. Low-income workers in particular change jobs and industries much more frequently than those with higher incomes. So when a PadSplit Member chooses a location, proximity to work is important, but they might not expect to work at that location forever. When a Member moves out, the empty room is immediately listed on the PadSplit marketplace, ready for another pre-approved Member to move in.
One of the amazing things about the PadSplit model is there’s incredible unmet demand for affordable housing in virtually every metro area in the United States. Hundreds of thousands of people are working, but aren’t earning enough money to afford to get their own place. When you throw in minimum credit scores, long-term leases, and hefty security deposits, it’s no wonder A full-time minimum-wage worker can afford a one-bedroom rental in only 218 out of 3,000+ counties in the United States.
With PadSplit, Members can find affordable living spaces across the country in record time. So, it’s rare that their Hosts will have empty rooms or that fellow PadMates will be left without a room.
Focus on the micro-location
It’s easy to get caught up in promises of large appreciation and better cash flow. These are things we all want. However, none of that will matter if your property isn’t appealing to Members. As a result, you need to think like a Member. Members prioritize location during the decision process – micro-location to be exact.
The fact of the matter is that you probably have a country, city, and maybe even region/borough within the city in mind. That’s the location on a larger scale sorted. However, in reality, the fluctuations in demographics, property prices, quality of life, and commute times are exacerbated the closer you look.
Two neighborhoods might be located side by side; one neighborhood might be a 3-minute walk from the nearest metro station, while the other is a cumbersome 20-minute walk away. A short walk to public transit in a so-so neighborhood is better than a long walk to public transit in a better neighborhood. The specific house and street matter much more than which part of a specific city it falls in.
It’s constructive to imagine your life if you were to live day-to-day in every neighborhood you consider:
- Is it close to public transportation?
- Are there major shopping centers and grocery stores in the vicinity?
- Is the neighborhood safe?
Once you’ve mastered this mindset and vetoed neighborhoods in the area, it’s time to take a closer look at the homes on offer within your chosen locations.
How many bedrooms do they have? Do any of them have en suites? What about gardens, patios, sheds, and so much more? You’ll have to learn what the “average” layout and makeup of the homes look like and consider what clients they would attract.
Don’t overthink it
We’ve had PadSplit properties do well in big cities, small towns, suburbs, and exurbs. Turns out that where there are houses, there are usually businesses, and those businesses employ people who want affordable housing. Some houses are better fits than others. Some municipalities are more restrictive than others.
No matter where you buy, someone will want to stay there. Short-term and flexible long-term rentals are in increasingly high demand – no room stays empty for long. While it’s worth considering whether your property will be attractive to prospective Members or not, it’s best not to overdo the details.
From location to property size, it can be hard to know what to pick – especially if you’re worried about having empty rooms. Location still matters. it just matters in a different way than what you’ve probably been used to.
The fact of the matter is that Members usually prioritize price and flexibility above all else, with location following suit. Consequently, no listing on PadSplit stays idle for long due to our low-cost and inherently flexible model.
If you aren’t sure where to start, we recommend connecting with realtors from the PadSplit Vendor Network. These realtors are familiar with the PadSplit model, know what to look for, and can help you think outside the box to find the best location and property for your investment.
