Everyone has heard in real estate that the three most critical factors for property values are location, location, location. But it seems like many people don’t spend the time needed to find the best location. This especially applies to investors.
There is a lot that goes into determining what the right location is. Some buyers want to be smack dab in the middle of a big city. Others want to be left alone out in the country. Some want a big house. Others want a small apartment that’s low maintenance.
Everyone has a different taste, and investors can find good deals that someone will want. Just because there is someone who wants it, however, doesn’t mean you will find that someone. When an investor has a property for rent or for sale, it works best to have it in a place where a large amount of people want to live.
What makes a great neighborhood and how do you find it?
Think about where you would want to live. What would your family want? Generally there are several factors that appeal to a large portion of the population:
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Low crime
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Good schools
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Short work commutes
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Attractions and things to do
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Convenience to shops, restaurants, etc.
If you can meet all the criteria in your ‘farm’ area – that is the area where you want to invest – you will have the most potential buyers and/or renters.
By living in the area and just concentrating on your surroundings, you will probably be somewhat of an expert. Sticking to that one area though may mean you are missing out on good deals close by.
You might be a buyer on a wholesaler’s list. Or you might be a wholesaler. Suddenly a good deal comes your way, but it’s out of your local neighborhood. How do you tell if it is really cheap because it is a good deal or because it is surrounded by crack dealers?
Maybe you do some virtual wholesaling? That could mean you are targeting neighborhoods in other states. How do you find out which neighborhoods are the most desirable? And maybe the most lucrative?
Send out your ‘Neighborhood Scout’
Neighborhood Scout is a website that can tell you an awful lot about a neighborhood without having to live in it or search tons of sources. It is a one-stop shop for lots of information that can help investors make profitable decisions.
There are two ways to use the functionality of Neighborhood Scout:
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Enter in a specific address to learn about the neighborhood
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Search for different neighborhoods that fit your criteria
Let’s say someone alerts you to a wholesale deal in a new neighborhood. You think it sounds good, check some comps and are interested... But what about the area? Head on over to Neighborhood Scout to find out.
You can run up to 10 searches with a free account, which you will have to set up before using the website.
Once your account is set, just plug the address into the search bar at the top of the screen and find out all kinds of information about the property’s area.
Your report should return a variety of information.
Just click on one of the tabs to see the information. Unfortunately, Neighborhood Scout doesn’t give out all its information for free, but it will give you some good information without paying.
Then you can use this information in your marketing to attract potential renters or buyers. Or you can use the information to pass on the deal because the information makes the neighborhood sound pretty sketchy.
To activate the second option for neighborhood searches, you will have to pay a fee. Their pricing as of the writing of this lesson is as follows:
Being a paid subscriber will allow you to search for a neighborhood by very specific criteria. Just put in what you would like and the general area, and Neighborhood Scout will give you a list of neighborhoods in the area you are looking that meet your criteria.
These searches can be very useful to determine where you want to target your direct mail campaigns, hang bandit signs or advertise in the local media.
The paid subscription also allows you access to ‘heat maps’ showing you all the neighborhoods in the local area on a map with different colors. The different colors correspond to the different levels of criteria in different neighborhoods.
You can quickly tell the safer neighborhoods in the example above. Just click on the neighborhoods that look appealing and neighborhood scout will take you to the information for that neighborhood.
Finding out about the area where you are investing is crucially important to being a successful real estate investor. You can spend a lot of time calling police departments, googling schools in the area, and driving the area.
Or you can use technology such as Neighborhood Scout to quickly and easily see if a property is in an area that will appeal to a large demographic – and command a large price tag.
Holla at us
Have you used this site? Tell us about it below.
Learn about Your Area – The more of an expert you become about a certain area, the more likely you can pounce on a great deal quickly.
Do Research for Your Marketing – The more information you can provide your buyer or renter about their property, the easier it will be for them to pull the trigger. Do some research and use it in your marketing.
Network with Locals – Not only will they help you learn about a certain area, they may pass on a lead to you, if you let them know you buy houses.
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.