Everyone in real estate knows how important location is when determining value. A great house in a crime-filled neighborhood is usually worth far less than a dump in Beverly Hills.
The trouble is knowing whether a neighborhood is a great place to invest or whether it’ll have all kinds of problems. Sure, many ghettos are easy to spot, as are the really high-end areas. It’s those in-between areas that require a lot of digging to find the diamonds in the rough.
Typically, real estate investors have been able to use several sources to figure out if a neighborhood is worth investing in. Some of these sources include:
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Local Realtors
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Calls to the police and crime reports
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Reviews of schools in the area
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Census bureau information on demographics and income
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Sites like Rentometer to see how much rent can be charged
Investors want to see whether the typical people in that area would make good buyers or renters for investment property.
One-Stop Shopping for Area Data
The website AreaVibes has helped to put a lot of this data together for you in one place. When you go to the website, you just type in the city or town that interests you for investing.
When you hit enter, AreaVibes pulls up a map of the area, with a ‘Livability Score’ for your town. It also lists all the towns in the nearby areas that have a higher Livability Score. Perhaps you might want to look at a town close by the original town instead for better investment potential?
That’s good info so far, but what is a Livability Score? Well, they are made up of a bunch of different components:
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Amenities (things to do there)
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Cost of Living
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Crime
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Education
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Employment
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Housing
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Weather
All of these components should be interesting to potential investors. People will want to live in areas that have lots of amenities, which can include access to shopping as well as recreational activities.
Cost of living is obviously very important to both potential buyers and renters, as well as investors…
An area that scores high for cost of living on the Livability Score means the cost of living is very low. That could be good or bad for an investor, depending on what type of investing someone wants to do.
Section 8 investors may want a low cost of living area. High-end flippers on the other hand, want a very high cost of living (and a low Livability Score in this area).
High scores in crime (meaning low crime), education and employment will probably lead to a high housing score. People want to live where it’s safe, their children will receive a good education and it’s easy for them to find a job. Those scores will also help push the demand for housing up, and make it more profitable for real estate investors.
The Devil is in the Details
Just receiving a number score in each sub-category score doesn’t necessarily tell you the whole story of what’s going on in your town. That’s why AreaVibes gives you the ability to pull up a report for each category with more details.
For instance, for crimes, AreaVibes can break down the number of crimes for your town and compare them to both state and national averages.
Here are some of the other details that AreaVibes will provide:
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For Cost of Living, it compares cost of living indices in several areas including groceries, health care, housing, transportation and utilities
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Education includes average test scores, student-to-teacher ratios, total public schools, total private schools and total post-secondary schools
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Rates of income include median household incomes, income per capita, median incomes for owner-occupied homes, median incomes for renters, the unemployment rate and the poverty level
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Housing will tell you the Median Home Price, Median Rent asked, the average people in a household, the percentage of owner-occupied households and the percentage of renters
If the numbers look good, not only will it lead you to good areas for investing, but it will also help to advertise your rentals and flips for people moving into the area.
Armed with this information, you may become interested in investing in the city you are reviewing. Just scroll down on AreaVibes and you will see a place to pull up some listings.
AreaVibes has a nice search tool powered by Zillow to look at what is on the market, based on your price criteria. You can also specify number of bedrooms and baths to pull up the listings.
Scroll further down, and there is a tool to compare Livability Scores between the city you were just reviewing and another town or city you are thinking about investing in. Enter in the other city and it will show you a side-by-side comparison of the Livability Scores to help you make your decision.
Although we highly recommend you pull data from several sources when making your investment decisions, it looks like AreaVibes can help you find good investing areas (or eliminate bad ones) quickly.
What’s Your Vibe?
Do you have experience with this site? Tell us about it below.
Become an Expert in Your Area – Knowing the trends in an area will help you spot investment opportunities.
Gather Data from Several Sources – Don’t just rely on one source. Trust but verify.
Educate Others – Once you settle on an area, let other people – buyers, renters, Realtors, etc. know why you picked it, and why they should too!
JP Moses
is a real estate investor in Memphis, TN, with experience ranging from land lording to note buying, rehabbing, and wholesaling. However, wholesaling is the area that he enjoys most and where he bring the most experience and expertise to his students.