New to Real Estate: How to Determine if the Area is Good
Lincoln University, PA · Member since 2018 · 8 posts · 0 votes
Hello there,
I am new, and interested, in starting my journey in real estate investing. There is one question I have to start this out:
How can I tell if an area I want to invest in is declining, rising, or a poor decision. Aside from driving around, I have no clue how to tell. Or should I just pick an area I already know and go with it regardless of whether or not it is declining or rising.
Hi, Isaac!
When selecting the area, I do suggest taking the things you listed into consideration rather than just going with what's familiar. However, if you're torn between 2 great options with one being familiar and one not, the familiar one breaks the tie IMO.
If you're looking to use the property as a short-term rental, the following locations rank as the 5 best places to buy in 2018 (according to a recent report):
You'll also want to consider any additional costs that may be required to effectively run the rental depending on the location and condition the property is in when it's purchased; including home upgrades, management fees, taxes, insurance, and utilities.
Before you get in too deep, though, you'll want to check in on the local policies, rules, and regulations to ensure all of your bases are covered. There are some areas that do not allow certain types of rentals, or have more of a stringent process you must adhere to. You'll also want to get a full understanding of the tax implications associated with renting out a secondary home. Paying attention is always better than paying fees – am I right?
Finally, I agree with some of the other responses here, too, like taking into consideration the school district and driving around the area yourself once you have a few narrowed down. Even if your short-term focus is using it as a rental, it's good to also keep in mind what aspects will give you the most bang for your buck in the case of a future resell.
Hopefully this helps! :) Best of luck with your selection.
Hello Isaac! You have found a good place to be . There is very much to learn and ask questions. I joined this group about 3 years ago and I am still seeing new stuff. I spend about 10 to 12 hours a day on the Internet, 7 days a week, as well as reading a book about every two weeks. I think it will help you to know a little about me so you can believe what I say. I also graduated from college with honors in business that emphasized real estate. Way back then in Texas you could go straight to getting a broker license if you had enough points and with my degree I could get a broker license if I passed the test and I did and I kept it for about 30 years. At that time I got into construction management and I stayed in that for about 30 years. Now back to you.
You can check on an area a few different ways. One way is to or call the county tax assessor office and ask them where they have done the most work lately and separate the new from the existing. You could also talk to an experienced real estate Agent. You could talk to an older appraiser office and ask them about the areas that they mostly work in. Commercial retail development in a specific area could help your decision. Another way is going to local real estate clubs or events and network with like-minded people that have some success.
You can select any area to work in with the best statistics. Whether you know that area, study that area and know what is going on. Get to know that area well. With your learning you will gain confidence along with your property acquisition experience. The zoning may have changed regardless of what you see. So check that out. At first, just do what is average and make your decisions, with you business mind. not emotion.
Do not try to do everything yourself. Try to start off in your "backyard" or somewhere fairly close. Make your goals and a plan. A plan should complement your goals. Have good feelings in your gut about what you pick as your geographic area. Good luck to you!
There are several websites where you can look up data on cities and neighborhoods. CityData is one that comes to mind. They usually have comments from people who know the neighborhood but take it with a grain of salt.
The best way is to drive around the area yourself.
This is where local realtors are for. Each area consists of micro-climate. One must have to have knowledge of its local economics.
In our area the question is where are high tech jobs? When I mention Amazon will create 2000 jobs in East Palo Alto, CA. People jump on it thinking they are warehouse $15 dollars hourly wage? I correct them they are tech centers $75-90/hr development center plus 5 figures annual bonus. High achievement STEM majors only. Home were $150K a few years ago. Now most are $1M+.
A lot will depend on what type of real estate you want to become involved with; rentals, flips, wholesaling, brrr, singles, multi-family, commercial, etc.
Here are a few suggestions: (especially for singles and small multi-family) concentrate on the best school district, get the worst house on a great block, stop your car and get our and actually speak to people working on their yard or just sitting on their porch, eat at a local mom/pop coffee shop--sit at the counter and speak to the waitress and customers.
Go to REIA or other real estate meetups, speak to experienced realtors that are long-term investors themselves, try and find a police officer and or fire fighter that invests--they know the deal, speak to licensed contractors in the area you are interested in and find out how they feel about working there.
Hope this helps. Good luck!
I went through this process when I decided where to retire.
At a high level, I used financial media, Wikipedia, and local news (many TV stations stream their local news broadcasts) to select a state and city.
At the neighborhood level, I used CrimeReports to get a feel for crime and real estate listings to get a feel for the type of housing in the zip code.
Then it's boots on the ground to home in on a specific choice.
Hi, Isaac!
When selecting the area, I do suggest taking the things you listed into consideration rather than just going with what's familiar. However, if you're torn between 2 great options with one being familiar and one not, the familiar one breaks the tie IMO.
If you're looking to use the property as a short-term rental, the following locations rank as the 5 best places to buy in 2018 (according to a recent report):
You'll also want to consider any additional costs that may be required to effectively run the rental depending on the location and condition the property is in when it's purchased; including home upgrades, management fees, taxes, insurance, and utilities.
Before you get in too deep, though, you'll want to check in on the local policies, rules, and regulations to ensure all of your bases are covered. There are some areas that do not allow certain types of rentals, or have more of a stringent process you must adhere to. You'll also want to get a full understanding of the tax implications associated with renting out a secondary home. Paying attention is always better than paying fees – am I right?
Finally, I agree with some of the other responses here, too, like taking into consideration the school district and driving around the area yourself once you have a few narrowed down. Even if your short-term focus is using it as a rental, it's good to also keep in mind what aspects will give you the most bang for your buck in the case of a future resell.
Hopefully this helps! :) Best of luck with your selection.
hey everyone hows it going hopefully great ,thats all good points but what about a person like me that has been born and raised and survived in a war zone and sees no problem making money in a war zone , I looked around and asked the same questions to other individuals but got a very short answer now do they just not want to give there secret out or do they just not want to tell me ?
stay blessed and great success to one and all