Knowing When to Walk Away or Take a Chance

[Tiffany U.]

Newbie question.

I am looking at deals trying to break into the market.  My question is how do you know when to leave a property alone and when to go ahead and invest.  I've run the numbers they work.  The property has tenants.  But the property is not in the best neighborhood.  I'm not really sure what that means because I live about an hour away.  

Part of me says go for it as an investor who is looking to buy and hold properties my lens that I view properties is different then how I view a property that I want to personally reside in.  The other part of me says the school district is not good and I'm not sure about how well the property will appreciate in the future.  I have looked that the county and see the numbers as they are okay. 

Looking at the numbers and taking the leap are two different things. I know that REI is filled with on the job training opportunities. Am I better off investing in my first property that's not in the best neighborhood than not investing at all and continue searching? At what point do you just dive in and start learning?

[Edwin K.]

Hey, the best way to learn is to jump in. Just like riding a bike for the first time you will get some scrapes and bruises. I got mines on my first deal but best part about it is I started and learned. You ran the numbers and they work(check)

1. Now go view it. You decide what "a good neighborhood is". Don't let anyone else decide that for you. I look in areas where some people on BiggerPockets will say it's not "good" but to me there's nothing wrong with the area. I grew up in areas that was deemed bad by certain people but in reality it's not. Heck I'm currently house hacking in a C area and I'm enjoying it. 
2. After you view it get a good and I mean good inspector. The one thing I learned from my first deal is picking a good inspector. Make sure the inspector have good reviews online and ask him/her to send a sample of how their inspection sheet look like. No sense in paying an inspector and you can't read their inspection sheet. 
3. If you have time get a contractor to bid on the issues the inspector found. 
4. After step 1 and 2 and 3 run the numbers again with the new information you have gained. Renegotiate the price if you need too. If the numbers still work move forward. 
5. Ask the owner for copies of the lease and all other paperwork on the tenants. Read the leases carefully find all the clauses for ending the lease, find the lease terms, rules, and so on
6. Now close on it.  

You got this... I believe in you.