Picking a neighborhood?????

Question

Howdy!  I've been researching and reading blogs and posts and feel like I know just enough to be dangerous.  I want to buy our first rental property to diversify our portfolio into real estate.  We live in California, so anything local is really prohibitive.  I think San Antonio or Austin are promising, and I have family nearby who can help some with closing and property management.  BUT they are NOT in real estate, or particularly real estate minded.   They think their neighborhood would be best because it is what they know.

So, my question is how do you go about narrowing down to the neighborhood you want to target for buying when you don't drive and live in the area yourself.  I have some sites that can help with if it's in a good school district and such once I find one to target.  I've seen suggestions to reach out to realtors and interview them.  1) I don't know what to ask 2) I don't want to lead someone on and 3) I don't want any pressure just so they can get a deal done (I've been a contingent recruiter and appreciate why that pressure would be there).

Once you pick a city - how do you all pick a suburb or neighborhood??  Especially when you are investing out of state.

I would like to move fairly quickly before interest rates climb much more, but I don't want to make a bad first step.  I'd love any help or insights you could give me.

THANK YOU!!! And I of course I love my area, so if you want to know anything about my neighborhood here in Seal Beach, please ask away. I have 2 houses for sale on my cul de sac right now. (and by I have, I mean they happen to be for sale close to me - Ha!)

Rick Pozos · Answer

The first thing to consider is do you want to be in the high end of town, do you want to serve middle income people or do you want lower income neighborhoods. Once you have that in mind, you can find from the census data what areas fit your model. Then it is just a matter of doing marketing for divorces in the area, people behind on taxes, people behind on their mortgages, etc to find your sellers. You could even do some virtual driving for $$. Right now people are paying at or above market for properties on the MLS. I dont know about you, but I NEVER want to pay anywhere near market price.

Just because properties are cheaper relative to your area, you still want to get a bargain. I bet if you did some marketing in your area you could find bargains pretty close to you. People are flipping everyday all over SoCal. Ask them how they are finding the deals.

If a property here is 80k does not mean that it is a great deal. It could be only worth 70k. Keep that in mind when someone tells you that they have a property for you to see. As far as school districts, people live in the areas where there are great schools and people live in the areas with crappy schools. Some of the historic districts that are very high dollar (Monte Vista, Montecello Park, Beacon Hill, King William) have just average or slightly below average public schools in the city. Believe it or not, school districts MAY only be important to someone with school age children.

Trisha Morris · Answer

Rick - thank you for your insights!  You are right about school districts.  I was thinking about this as a homeowner who would eventually sell - even without school age children, I generally lean towards areas with great schools for demand and potentially having a higher appreciation as a result of that demand.  But as someone who is planning to buy and hold, probably isn't as critical to renters unless they have kids themselves.

Will - I like what you said about the potential for longer term renters if they have school age kids.  Goodness knows, I'd like to find some solid renters who want to hang out for a good, long time.  But maybe a retired couple would offer that same benefit?  So a safe neighborhood will be a must for us, and maybe great schools are a strong want.

I appreciate you taking the time to respond so thoughtfully!  I've called a couple of realtors to try and start making some connections to find some properties to consider.

I have friends who have done this long distance and never see their properties themselves.  As I'm getting closer, I'm getting really nervous about that piece.  Do either of you invest from afar?

Thank you again for your insights and help!!!  Hopefully I'll be able to pay all this help forward someday!

Trisha

Will Pritchett · Answer

Trisha Morris, some of our trendiest areas are in pretty poor quality school districts and people do live in all areas - as Rick mentioned. I do, however, consider school districts for my business because I like families that like their schools and never want to uproot their kids. I know I consider moving but my kids are thriving in their public school and I don't want to upset that. The longer my tenants stay, the more money I make. But this is just what works for my business. Let me know if I can help you with areas of town etc.

Good luck!

-Will

Kathy Villagomez · Answer

Thank you for posting this question because I have been wondering the same.  AND Thanks for the informative and helpful responses....awesome!

Brian Phelt · Answer

Trisha,

The agents on this site for San Antonio (myself included) are always pretty good answering questions so don't hesitate to each out.   To be able to give you guidance, it would be helpful to know what you are wanting to achieve.  Are you looking for instant cash flow (and how much), or are you looking for something that will appreciate by a certain amount over a certain duration?  Or both?   I'm happy to help you when you are able provide some answers to these questions (no pressure) so feel free to respond here or send me a PM.

Best of luck.

Trisha Morris · Answer

Thank you @Andrew Johnson - that actually helps a lot!  They are good with the "don't go there" stuff.

Thanks!

Trisha

Picking a neighborhood?????

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