How to find a good neighborhood?

Question

Good morning everyone.I was learning about the things that I think are important to know about real estate investing and I have the big picture of how to start investing.Now in every place\guide I never see information on how to find a good neighborhood to invest in.My question for you is.... if I look at some areas in Chicago, how can I be sure that I am finding a good neighborhood with the lowest crime and good schools, no flooding, etc.what criteria are you looking for to find a neighborhood to purchase a property?Thank you.

Paul De Luca · Answer

I think it starts with online searches such as "best neighborhoods in Chicago"and "underrated neighborhoods in Chicago". There are a bunch of articles you can find about rankings for different neighborhoods. Asking other investors where they like buying and why is also a good step. I also like to use https://www.niche.com/places-t... to provide broad overviews of neighborhoods and use shortcuts like A/B/C/D class neighborhoods so I can quickly understand and explain to clients what that means.

There's also a correlation between quality of neighborhood and prices & property taxes. The price and property taxes are in part a reflection of the demand for a property in a given neighborhood. Generally neighborhoods with higher prices and property taxes likely have better schools and amenities but are less desirable for investors since that contributes to less cash flow.

Bob Stevens · Answer

All good, also I do not buy into all the BS on the internet regarding crime, and good schools. If I did (and thousands of others) would not have been buying in the Cleveland, Memphis, Indy markets for the last 10 years. EVERYTHING on the internet says RUN. Well since then pricing has doubled, tripled quadrupled, and much more, on top of the 20%++++ net caps. Its ALL about hands on knowledge and your team. We are buying everything we can in parts of EAST Cleveland, see what the internet says about that. Well, it would be 100% incorrect as usually :)

Yes, everyone strategy is different, not right or wrong, just different. Continued success to you

All the best to you

Bob Stevens · Answer

I don't, its ALL about price ( of course you do not want to ne in the middle of drug houses) but PRICE is the biggest factor. How many times have you driven past a neighborhood and said, wow glad I do not live there, but people do :). PRICE PRICE PRICE, not LOCATIO LOCATION LOCATION only the inexperienced say that as thats what all the books say.

All the best

Matthew Drouin · Answer

@Elen Saar this is my method.  Although, I can’t really speak to schools specifically because they are so subjective.  Maybe check some local Facebook parents groups and gather a consensus there?

1.)  General neighborhood curb appeal.  Do the properties around the area seem generally well maintained?  I mean there’s bound to be a stinker here and there (those are the ones you want to buy), but are lawns neat and tidy?  Flowers?  How are all the roofs in general.  A lot of houses with roofs that are shot?  Garbage blowing around.  Tons of cars in every driveway or even parked on front lawns?  This curb appeal check is indicative of a couple of things.  Occupants going the extra mile is a an indication of owner occupancy and general pride of ownership.  Secondly it signals that rents or incomes in the neighborhood are high enough to warrant reinvestment back into the properties.

2.)  Retail check.  Look at the adjacent retail corridors.  What do you see?  Starbucks?  Chick Fil A?  Whole Foods?  Or do you see Rent A Center, check cashing stores, corner stores, smoke shops, and pawn shops.  Also in these retail areas, what’s the tolerance of riff raff?  Do you see panhandling and loitering?  This is a general indication of income.  Plus your tenants will find adjacency to a hip area a valuable amenity.

Hope this helps in your search!

Eudith Vacio · Answer

Hey @Elen Saar 👋🏽

I typically use this website to vet good / bad areas; its pretty accurate. & @Paul De Luca gave you another great resource for checking out school ratings.

https://www.neighborhoodscout....

& I use this website to check the flooding in the area:

https://www.fema.gov/flood-map...

hope that is helpful!

John Warren · Answer

@Elen Saar what areas of Chicago are you familiar with? Do you have family or friends here? If you are investing out of state, I would work backwards from areas where you have at least some boots on the ground.

Similarly, to NY, Chicago is a massive MSA. You can find good, bad and indifferent neighborhoods all within a 10-minute drive, and you can drive for two hours to get from end to end.

Scott E. · Answer

I agree, you've got to keep emotions out of it. We all have different strategies and risk tolerances. Personally, I'd never invest in a war zone. I don't want to deal with construction in a bad neighborhood, and I don't want to deal with the tenants I would attract if I owned property in a bad neighborhood. This strategy has worked well for me, but that doesn't mean my strategy is the only strategy.

I re-read the original post. I guess it's not 100% clear if he's looking for a property for himself to live in or a rental. But he specifically said he wants to find a good neighborhood with low crime and good schools. You haven't really offered any feedback to help guide him towards a neighborhood with low crime and good schools...

Bob Stevens · Answer

In correct, PRICE is the key, I will take 25% net cap in a not great area vs 10% in an ok area. As long as you have a team that knows what they are doing. Also, in many cases the " bad" area tends to gentrify. Heck, I have purchased many properties and was told I was NUTS. Well, I am now being offered 3 x what was paid, on top of the 25- 30% NET caps, (cash purchase) Now of course, there are certain areas that well, NO of course not, not even for 5k. Price Price Price for the most part. It's an investment, you are not living there. Keep emotions out of it,

BTW poster mentioned INVESTMENT property NO primary, HUGE difference.

All the best to you

Scott E. · Answer

Contrary to what @Bob Stevens always says, it's NOT all about price. It's all about location. ESPECIALLY because you are posting this in the First Time Home Buyer forum.

You need to find a neighborhood that you feel safe living in. And a property that your tenants will feel safe living in after you move out (assuming your plan is to eventually turn this house into a rental). If you pick your location right, you should have stronger appreciation over the coming years compared to buying in a war zone.

All that being said and to go back to your question, you can search "crime maps" for different areas and this will give you a lot of data that you're looking for. But I'd also talk with a couple of local experienced agents. A good buyers agent will help you find a neighborhood that is safe, that has good nearby schools and amenities, and that fits your budget.

How to find a good neighborhood?

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