Building A Real Estate Investment Strategy With Location Intelligence
When evaluating new real estate investment opportunities to grow your portfolio or doing your due diligence on an existing investment the importance of doing your homework cannot be overstated.
You want to be one of the first firms through the door in an up-and-coming neighborhood but how do you find that new neighborhood in the first place? Real estate investment groups are turning to Location Intelligence to answer challenging questions like:
- How can I identify new areas and neighborhood hotspots for potential investment?
- How can I better identify and understand risk when making a new investment?
- How can I use publicly available data to better inform my real estate investment strategy?
More than many industries Real Estate relies heavily on location-based data not just because any property that you may invest in can be pinpointed on a map but because the circumstances in the world around a property inform it’s value. Real estate value is intrinsically tied to broader social and economic conditions so the more detailed your understanding of a location the greater your insight will be into its potential.
By enhancing your understanding with commercial demographic and transit data you give yourself the best chance of identifying a real estate investment opportunity early and ensuring the investment decisions you are making provide you the most value. Here are 4 ways location data can strengthen your real estate investment strategy.
Visualize local public and alternative transit options.
Understanding how easily accessible a prospective property is or will be in the future is critical to gauging its value.
- Do people have access to the property you are looking at?
- What type of public transportation options are within a 5 minute walking distance of your property?
- Are there plans for a new line nearby or is there a major shutdown planned that may impact the commute of prospective renters?
- Are bike-sharing services and other alternative options available nearby?
The above map shows subway stops as well as visualizations of all areas that are within a five minute walk. Being able to visualize this data can give you better insight into a property’s accessibility and desirability.
Use taxi pickup/dropoff data to find emerging hotspots.
It is important to gain a good understanding of what is drawing people to a neighborhood. This can help to paint a fuller picture of the inherent value a real estate investment opportunity may have.
Using open datasets such as taxi cab pick-ups and drop-offs coupled with data from sources like Foursquare and Yelp you can better understand how nightlife is trending in an area.
In the example below an investor might notice the specific influx of identified ‘partiers’ being dropped off in the East Williamsburg/Bushwick neighborhood.
This is valuable information that can cut both ways in terms of impact on a possible investment property.
Are the local bars getting an uptick in quality reviews and check-ins? Is there a new cafe around the corner in a neighborhood that you are assessing?
This may translate directly to neighborhood appeal for renters shoppers and visitors and speak to a positive outlook for an investment property. At the same time it is beneficial to know if New York’s hottest club thumping bass and all just moved into the warehouse space next to an apartment building that you are eyeing for investment.
You can also explore social data to get a picture of how and where a neighborhood is being talked about. Mapping mentions over time can give you insights into how popular a location is in the local consciousness.
Enhance your visualization with demographic data.
Demographic data is key to understanding the long term potential of an investment opportunity.
Visualizing trends in income education and cost of living will provide you with deeper insights into not only who lives in a neighborhood but also how that neighborhood will look years after you decide to invest.
Open data on demographics can be mapped out to give you a granular look at the trajectory of a neighborhood block by block. In the map below for example we can see the recent increases in income as well as in the number of residents who hold a bachelor's degree painting a picture of recent demographic shifts in northern Brooklyn.
Unlocking the full power of your location data
The full power of location intelligence doesn’t come from simply observing these disparate datasets. On their own one of the above trends won’t give you a full understanding of the potential of an investment opportunity and could even steer you in the wrong direction.
But all of these factors together can paint a powerful picture.
Visualizing all of these factors as we have done on the map below gives you a full view of an area incorporating many of the key insights and data points that are most helpful when assessing your investment.
Being able to map all of the above data and engage with it using powerful spatial analytics tools can empower your analysis and help you to draw insights into the long term value of a real estate investment opportunity. Location Data is a powerful tool as you explore opportunities in new areas and grow your investment portfolio.
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