Tips for knowing best rental property area?

Question

What is your best method of determining hot rental areas? How do you do your research and do you ask any leads? I recently moved to NJ and I am interested in buying a rental property in the area of Edison, New Brunswick or South Plainfield. There are a lot of options available but I am not sure how to narrow down my search. I am ideally wanting to make a net profit of 10% annually. If anyone happens to be located around this area, do you know if this is possible?

Jonathan W. · Answer

@Deb R. Lol. Cute

If you ask people about themselves they will do all the talking. 😝

Jonathan W. · Answer

@Deb R. Some of this is easy enough to find out (literally google maps) and some you need to do some investigating. I don’t buy far from home so researching for me is constant.

I talk to people.

I drove for uber for like a week and although i think it’s a mediocre side hustle at best, you can talk to people who live in the area but generally talk to those around you! One guy I gave a ride to was a construction worker and he had fascinating info for me. People you’ll run into aren’t always right but they usually know things you wouldn’t. Connect what you know with what they know and you’ll have a better idea of the demographics around you.

Talk to experts, experts in related fields, sales agents and you’d be surprised what kind of information you’d run into.

I love marketing so maybe it’s easier for me to think about some of these things but I believe most businesses are people businesses so find out about what people are drawn to in the area and who is doing what. Connect!

Dennis M. · Answer

Basically Anywhere that offers poor cash flow is going to be a hot market

Tyler Drapeau · Answer

@Amr Moussa In addition to sme of the advice above, you should attend one of the BP Wednesday webinars, if you haven't already. Watch how Brandon analyzes a deal. Run your potential deals through the calculator and see if they meet your financial criteria. That would probably be the best way to eliminate deals where the math does not work for you. You'll have specific questions along the way about how much certain aspects should cost and you can reach out to experts in each of those areas (PM, insurance, contractors, etc).

Deb R. · Answer

Thank you for the information. My husband and I are hermits and joke about moving into a hobbit hole :) and not just for hurricanes.

Bill Goodland · Answer

To me, its a balance. There's unicorn zip code. There will be more cash flow where there will be less appreciation. There will generally be more crime and problem tenants in the areas with better cash flow. I would pick an area that is B/C class with a housing inventory that has some value to be added with strong rental demand and ideally low enough crime for you to feel comfortable going there at night.

Deb R. · Answer

How do you figure all that stuff out?

Jonathan W. · Answer

@Amr Moussa demographics and what’s in the location

Is there a military base?

Is there a lot of construction/construction workers in the area

Are you near educational institutions?

Is it populated by retirees ?

What businesses are in the area? Can people who work there afford to live near there or do hey have to commute? Where do most of the workers commute from? What’s convenient for them?

Are there attractive and convenient places?

Last time I rented it was 100% for location, being near the freeway and being near awesome places to eat and socialize.

These are just things to ponder. You know that saying location location location? For rentals I’d add the word convenience.

Jason D. · Answer

@Amr Moussa you wont know the best area unless you know what type of rental and tenants you want.

My first thought is Rutgers student housing, but you may not be interested in that.

Are you looking for cashflow or appreciation?

A, B, C, or D neighborhoods?

John Corey · Answer

What does that mean? Net on paper including equity appreciation or 10% net, in cash at the end of each year?

A buy and hold strategy could be perfect for some investors yet they will not see a 10% increase in their cash position each year.

Tips for knowing best rental property area?

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