Neighborhood Analysis Questions

[Jacob Elbaum]

Hi BP Members!

I've been learning about REI for about 5+ months now and feel just about ready to make my 1st investment.

Sometimes, I will see properties in my area within my price range that are B/C class areas, and want to make the investment, but then second guess myself because I do not know the neighborhood inside and out like some highly successful investors recommend you should. 

Here's my 2 questions: 

1. How important is it for you to know the very intricate details of the area you are investing in? 

2. What are some of your analysis tools and methods (if someone is willing to provide step-by-step, that's awesome!) for going about analyzing a specific neighborhood? 

Thank you guys!

- Jacob

[Nate McGee]

Understanding a neighborhood is important information to have, that's for sure. Personally, what I do first is look online at crime reports for the area. Site's like https://spotcrime.com/ or https://www.crimereports.com/ are a good place to start. A lot of neighborhoods have crime happen; but some crimes need to be weighted differently, at least for me. If I see any burglary, robbery or assault in the neighborhood, I avoid it. If I see crimes like domestic disputes or vandalism, I don't typically pay them mind; however, this could be different for you (i.e., what if your property get's vandalized).

Other good sources of information are http://www.city-data.com/ and https://www.neighborhoodscout.com/. Be sure to also check the city website for where the property is located; oftentimes these websites have crime information posted or can point you to the police website for more information.

The next thing I do is visit the neighborhood at different times of the day and different days of the week to get an idea of the mix of people, noise issues etc. If I drive through a neighborhood at 11 AM on a Tuesday morning and see a lot of individuals or groups of people outside, it makes you wonder why they are outside and not working.

The last thing you can do is then maybe walk the neighborhood and ask around about the neighborhood. Ask people if they like the neighborhood, is it safe, are there any community events etc. This should give you a good idea of the area or at least serve as a good starting point. 

Let me just offer a little piece of advice that helped me when I first started out. You need to become comfortable with only knowing 60-70% of the information that you want. I missed many deals in the past because I was trying to get 100% of the information I wanted. By doing this, I found that I was giving myself an excuse to not pull the trigger on a deal. Once I started to become comfortable with the unknown and became confident that I could salvage/fix any of the issues that arise from the unknown, things became much easier and started to close deals.

Hope this helps get you started a bit.