REAL ESTATE INVESTMENT STRATEGIES #4: LOCATION
The first area where Real Estate Investors should narrow their search is location. It allows you to become an expert quickly. It’s about specializing in a neighborhood, subdivision, or specific area of town. You will have a clear understanding of all the factors that determine local property values and rental rates.
Obviously, you are looking for desirable and emerging neighborhood or community. These tend to be the areas close to work, shopping, schools that have reputations for great quality of life. Also, transitional neighborhoods on the rise can be ideal for investors. It can be very hard to find opportunities in established neighborhoods because everyone wants to live there, but in transitional neighborhoods homes are often overlooked and undervalued.
Buying a investment property in a neighborhood that you are not familiar with can be really risky. One San Diego investor joined a real estate investment coaching club that promised great deals at the end of course. He had to extend the subscription fee a couple times to get that deal. The deal turned out be a Auction fixer property in Detroit. Bank was only asking about $15,000. It seemed to be pretty cheap but investor did not have to time to investigate due to auction, felt like he should go for it because he already spent quite a lot in fees for this real estate investment coaching club. After he purchased he asked me to find a Keller Williams Agent in Detroit to go over to the property and take a look at it, and find contractors to fix it so that he could flip it. Unfortunately the property was located in the area where no real estate agents nor contractors would go. Property had the violations with the city and they were threatening to demolish the property. Needless to say, the investor lost his investment money in both the property and the coaching club!
Real estate investors should continue to heed the mantra “location, location, location.”