What do you look for in a neighborhood?

Question

I am new to real estate investing. I hope to get into rental properties and I am not sure what type of neighborhoods to look for. I have found some properties in my area but other real estate folks I know say to stay away from "that part of town."

Any tips on what to look for in a neighborhood?

Andy Collins · Answer

1. Schools, Schools Schools,,In the same town there might be several high schools and you go to a high schools that area is 'assigned to',,,in a town I have rentals there is one high school in heavy demand, so thats one area I buy in. It's a little harder to find a deal, but if you keep looking you can find one. 2. not many rentals in the area, go to the appraisal district website for your county/city whatever, go down the street and look at where the owners live,,if its at the address of the house, then its owner occupied, if the legal owner is listed at a different address, its a rental,,I try to not get into any area (and by that I mean the block the house is on on a few blocks in any direction), that isn't 80% owner occupied. 3.I try to find mature neighborhoods,,not built in the 50's, but prefer 80's or so, I see too many new neighborhoods in the price range I look for (ARV of $100-$120k) that come crashing down,,more mature neighborhoods tend to change slower. 4. How far is it from my house,,I try not to have a a rental more than 20 minutes from my house,,,I might go farther, but the farther I get away from my house the less I know about the neighborhood,,,,I try to buy in areas I know well because I have studied and liked them, I know what houses cost, what rents run,,,I know the area well, and can even catch if the neighborhoods start to change andy

David Krulac · Answer

@Justin Aymer Your local assessment office has that info, but having the address of the owner. If that is different than the address of the property, then the property is not owner occupied. Many assessment offices and almost all of the larger ones have the assessment data on line so you can find out that info from you home or office without going to the courthouse.

Justin Aymer · Answer

Daren H. Thanks for your thoughts. I love "we all gotta live somewhere." My wife and I currently live in a part of town that isn't thought highly of, but we love it. Kinda historic architecture and nice people. Never had a problem with the people in our community.

Daren H. · Answer

@Justin Aymer I think along the same lines as most people have suggested (they are very smart people); however, when you really think about it, most areas with great schools, nice and mature neighborhoods, very few rentals, quiet, close access to amenities, recreation, jobs, with low crime, etc. usually don't have a ton a deals available that make sense for an investor (This is just my opinion and my personal experience). I read all the time where people say invest in areas where you are willing to live. I agree and I disagree. I would not invest in an area where I was truly afraid to live, but I would invest in an area where I don't want to live. The bottom line in my opinion is that we all cant live in the "very nice" neighborhood, but we all have to live somewhere. I would rather focus on the "good" and "okay" neighborhoods where I can buy for a reasonable price (which is relative to your area), cash flow and the people fit the make up of long term renters. I have a house that fits in the very nice category and every two years my tenants move out and buy their own house.

David Krulac · Answer

@Justin Aymer I will look at the assessment value and also look at the values on eppraisal and zillow, but I view them with a grain of sand and do not rely on them as being the correct current value. Actually knowing the values yourself in the areas that you invest is the best resource, the one between your ears.

Justin Aymer · Answer

@David Krulac I spent some time looking at properties on my county's assessment website. There is a line for Fair Market Value. Do you use that information when considering offers on the property?

Justin Aymer · Answer

@Andy Collins Thanks for your input. We have a lot of older neighborhoods around here. 1900s - 1950s. All the new stuff is on the out skirts of the city.

Justin Aymer · Answer

@David Krulac Thank you for that awesome tip on the assessment office website! My county assessment office website is going to be a huge resource for me.

David Krulac · Answer

@Andy Collins I like everything that you said.

Justin Aymer · Answer

@David Krulac Thank you for your thoughts. How do you find out how many homes are owned and or rented out in an area? Is there a resource for this or is it just talking to neighbors?