From a historical perspective, real estate investment has demonstrated substantial returns. According to the S&P 500 Index, commercial properties have averaged an annual return of approximately 9.6%, which is only marginally lower than residential properties by about 0.7%.

However, investing in real estate, like any other asset, carries inherent risks. Factors such as market timing, location, demand dynamics, and property appreciation rates over time can significantly impact your investment returns.

Let’s look at the reasons not to buy investment properties in certain areas of the country.

• High property taxes making it an illiquid market.
• High vacancy rate due to economic decline, making finding reliable tenants and selling properties difficult.
• Exorbitantly high housing prices combined with safety concerns and high cost of living.
• High crime and poverty rates.
• Declining population affecting property values and rental income potential.
• Economic stagnation, property depreciation, and expensive property insurance.
• Population migration away from the a metro area.
• Properties sitting on the market for months.
• Unreliable rental income.
• Complex laws and regulations making investment difficult and politically driven.

This is just a sample of the questions you should consider when seeking to buy investment properties in any market. Use these criteria to rigorously stress test your analysis and ensure a well-informed decision before committing.