Dear Heather,

I am going to be buying a home soon. Everyone is telling me different things but everyone always says: “Remember, it’s location, location, location!” Is this true?

New Buyer

Dear New Buyer,

The old saying “location, location, location” is more like a mantra when it comes to real estate. Buy in the wrong location and you could be setting yourself up for financial distress, or at least an unhappy experience. Right? In some cases, yes. But also, maybe not so much. Let’s get into it.

The argument for buying in the best location you can afford

You can change your home — adding, updating and renovating down to the last square foot. What you can’t change is how much land it’s on and where it’s located.

Add in an inherent desire to build equity when you buy a home, and it’s not surprising that real estate experts often recommend buying not only in the best location you can afford but, if given a choice, buying the worst house in the best neighbourhood instead of the other way around.

A home is an investment — and the best investments have the most room for improvement.

Ideally, you’ll be adding to the home during your ownership, building equity in hopes of a payoff when you (eventually) sell. You can add value on your own. If you’re choosing between an awesome house in a questionable location or an awful house in a great location, the latter would be the better choice.

Buying the house, not the neighbourhood

Yes, buying in a neighbourhood that seems to offer some cushion when it comes to value makes sense. But what if you fall in love with a house that’s not in your preferred neighbourhood? What if it’s not in anyone’s preferred neighbourhood?

The chance to buy a more affordable home can tempt people to take a chance on an iffy location. But how iffy is too iffy?

The potential for losing money on a home that may not ever appreciate because of the neighbourhood is only the beginning. Buying into an area that has higher crime can be dangerous to more than your finances.

Not sure what you’re getting yourself into? Here are a few ways to investigate the neighbourhood:

• Look at sales data. Ask your agent what other homes in the same neighbourhood have sold for recently.

You want to know what you’re in for in terms of your investment. Just because a home in a questionable area is priced low, doesn’t mean it’s good value.

• Talk to neighbours and area business owners. Sometimes, the people who live and work there can provide the most telling information.

• Consider the type of businesses close to the neighbourhood. What else is in the neighbourhood that might be attractive to your next buyer? A great school? Grocery store? Church? Bus route/beaches? Restaurant? Coffee shop?

• The quality of the businesses in the area can be one of the main determining factors when considering a neighbourhood. But while the idea that particular businesses are crime magnets (liquor stores, late-night drinking establishments) holds up in some cases, it’s not always true.

Buying in a transitional neighbourhood

Transitional is code for “might be on its way up”, which also translates to might be a great investment.

Many buyers seek out these changing neighbourhoods when their ideal neighbourhood is out of reach and/or to get more for their money and be on the “ground floor” as the area appreciates. A transitional neighbourhood usually has these features:

• It’s accessible, with proximity to public transport.

• Good neighbourhoods border it. A neighbourhood that’s adjacent to a much-desired one is much more likely to gentrify than one that’s surrounded by less prime areas.

• Days on market are dropping. Your real estate agent will be able to pull data and show you trends.

• Renovations are being made. One of the most obvious signs of a turnaround neighbourhood is homes that are in the process of renovation. Drive around and see if you spot construction going on — then you know there’s activity in the air.

At the end of the day, the house you buy is going to be your home, hopefully, for many years. So pick somewhere you and your family are going to be comfortable.

•Heather Chilvers is among Coldwell Banker Bermuda Realty’s leading sales representatives. She has been working in real estate for 27 years. If you have a question for Heather, please contact her at hchilvers@brcl.bm or 332-1793. All questions will be treated in confidence. Read this article on Facebook: Ask Heather Real Estate