How Land-Based Casinos Affects Real Estate Markets

Written by Ademir Abazagic Posted On Tuesday, 21 April 2020 07:44
Casino Building Casino Building Philippe Halle

How Land-Based Casinos Affects Real Estate Markets

The real estate markets are very volatile and not even experienced real estate broker can predict with certainty about how the market value of a particular property will rise or fall by the end of the day. Yes, one can make an informed guess but trying to make a lucrative deal on these markets requires the stamina to wade through the risks and volatilities. 

Casinos, on the other hand, have their share of risks but still also have a lot to offer. Ideally, land-based casinos have a significant contribution to the economy of the region they are based in and also have a substantial share in the tourism industry.  Thus, despite the risks and losses involved, casinos also contribute towards the development of a region. 

So, is it a great idea to invest in real estate where a new casino is about to be established? Well, investment is a bit of a gamble, and there are several things that real estate investors consider when looking to invest in an area where a new casino is due to open. 

What Does It Mean for Your Money to Buy Next to a Casino?

There are two ways to look at this point. First, buying a property next to a casino can be a jackpot since the value of the property might exponentially increase with time. One the other hand, real estate properties next to casinos end up having lower market value. This is so because casinos come with all sorts of whistles and bells, which could be a disaster to residential areas and few people would want to buy a property next to such commotions. 

These two points are debatable since most studies on the impact of casinos on real estate markets have ensued mixed results. Experts and real estate analysts also hold varying ideas. For instance, Summer Davis Inman holds that the value of real estate property next to casinos will be cheaper. He estimates that there will be a net value drop of the property ranging between 2% and 10%. However, this is not necessarily true since other factors contribute to the value of the property, and his ideology can only hold in theory. 

On the other hand, Jed Smith agrees that casinos are a nuisance; however, they are an attractive nuisance. Ideally, it is hard to predict the exact impact of a casino project on the real estate market.

Buy or Rent Out?

If you are wondering whether to buy or rent real estate properties next to a casino, the safest way to go about it is to buy the real estate and rent it out.  However, this will be a reasonable option if you have a place to live and can manage to pay the mortgage fast, which will help start making money from the real estate market. 

On the flip side, there is a possibility that you might not make as much profit in the long term to cover your initial investment cost. This is factoring in other expenses that come with real estate investment such as property taxes and taxes on the income obtained from renting out. More so, if you are looking to turn the property into Airbnb, you have to factor in some additional investments such as furnishing the room. You also have to keep renovating the property to help keep up with other competing Airbnb hosts. Thus, it’s likely that the rent will not cover all these costs, and it could take up to two years to actually start making profits. 

Is the Gamble on Real Estate Worth It?

Remember to keep in mind all the factors that impact the value of a property next to a casino and weigh the risks and potential profits to determine if it’s worth the hustle.  Whichever the decision, you should try to look past emotional decisions. 

As earlier mentioned, the real estate market is highly volatile, especially based on the hefty investment required to secure the asset. More so, it is susceptible to risks, and there is hardly any way to predict future prices. 

However, with the casino sector, you can use the available statistical data and forecasts to help make informed decisions.


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