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The Right Way to Investigate Your New Neighborhood

The house looks perfect and it has all the features you need.  The location is convenient for your needs and there really is nothing standing in the way of buying this particular property.  STOP.  Don’t buy the house until you do one thing; investigate your new potential neighbors.  Here are some tips for finding out the not so obvious facts.

Make Multiple Visits at Multiple Times

One of the best things you can do before buying the home is to visit the home are various times and various days.  The appearance of the neighborhood at 11:00 am on a Wednesday will likely be different from the appearance on a Thursday night.  Look for neighbors that are in the yard, on the street and how busy the roads are.  Are any of the neighbors engaged in any loud activities such as parties, electric tool use or other annoying sounds?  Take your time and make sure to visit the home on the weekend as well.

Chat Up Your Potential Neighbors

The people that will be your neighbors have the information you need.  However, it can be a challenge to get them to talk.  During your visits look for people out in the yard engaged in various activities.  Start a pleasant conversation and ask them about their opinion of the area and the neighborhood.  Ask a few open ended questions and give them a chance to talk.  Make sure to ask if there are any troublesome neighbors to look out for or any problems in the area such as sink-holes, poorly built homes or sewer issues.

Use the Internet

Various websites like Google and Bing offer maps and street views of nearly every known address.  Type in the address and look around.  It is likely that the pictures are at least a few months old if not a few years.  The home could look exactly like it does now or there could be some major changes.  Take time to look at the home you intend to buy as well as the adjoining properties.  You may discover something that raises a red flag and causes you to consider a different property.

Check Police Records

There are some websites and even smart phone apps that provide detailed police records for neighborhoods.  These sites will usually list things such as robberies, vehicle thefts, and violent crime. Some neighbors on one street may not be aware of crime that is frequently occurring one or two streets over.

See if anyone is Blogging

Sometimes there will be a blog or even a small community newspaper published for the area that you are considering.  If you can find the blog or recent paper take some time to review the information.  Local events, improvements in the neighborhoods and other items will likely give you enough detail to see if this is the right area for you.

Some of these steps may take a bit of time to complete and may seem awkward at first.  However, considering the large investment that comes with owning a home it really makes sense to spend some time researching your new neighborhood and ensure that it will be as nice as your new home.

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Which type of neighborhood is best for flipping homes?

When looking for an investment home that you eventually intend to flip it is important to remember that the location is just as vital as the actual home.  It is feasible to earn a profit in nearly every area but certain areas make it easier on the investor.

Top Qualities

When people pick out an automobile they focus on the features that are important to them and their current lifestyle.  In a similar manner, you can consider the following neighborhood features when considering an investment property:

• Homes that sold recently sold quickly and had strong interest
• Declining numbers of rental properties
• Homes at least 20 years old that will likely need significant rehab
• Steady values or, even better, increasing values
• Average age of homeowner is elderly; these people are potentially moving to better climates or downsizing
• Increased number of people moving from differing areas; signifies popularity

Three Types of Areas to Examine

In order to assist you in determining where to look for the right homes, here are three types of neighborhoods to consider.

• Rebounding areas – There are times when an older, well established neighborhood will undergo a major overhaul.  Many of the owners have made the decision to remodel the interior.  In some instances the owners may be undertaking expansive additions.
• New housing clusters – When an area becomes popular many builders will start developing new subdivisions.  The existing homes in the immediate area could be ripe for flipping.
• Farming region – Established real estate agents like to focus on an preferred area and call it their “farming area.”  They send out regular postcards and newsletters to the residents so that when a home comes up for sale they usually think of that agent first.  A home investor can follow a similar strategy and be the first to know of a potential home for sale at a discount.

Keeping Your Ear to the Ground

Some investors like to focus on their own zip code or a nearby area.  This makes it easier on them because they already know a bit about the location.  There is no long distance commuting to check out a potential property. Sometimes, neighbors can actually provide a good tip that leads to a purchase.  And the local gossip is usually easy to find.

However, this only makes sense if the area is holding steady or rising.  A neighborhood suffering from falling values, crime, or an imminent new highway is not a good choice, no matter how close it is.

Don't Get In Over Your Head

This should come as no surprise, but it is also important to remember your financing.  Finding a great home at a 40% or 50% discount is worthless if the home is $50,000 more than you can afford.  Always keep the price in the forefront of your mind since it is a very important piece of the elimination process. If a neighborhood is out of your price range, focus elsewhere.

Following a well-designed plan is important for almost everybody.  Building a business, planning a party and even putting together a family vacation all work more smoothly when there is a good plan in place.  Buying a home for flipping is no different.

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Financial Gurus Still Believe Rental Property Is a Safe Investment

(Investment Properties: Part 3 of 5)

The record low interest rates for mortgages have helped the real estate market to slowly improve month by month for the last several quarters. Thanks to these low rates real estate has continued to be a sound investment for people who wish to diversify their portfolio. For those people that are considering buying their first investment property here are some considerations to keep in mind.

Neighborhood History

It is wise to pick areas that are accustomed to rental homes. One of the most obvious choices would be neighborhoods close to a major university or college. If there are no colleges or universities in your area then look for certain neighborhoods close to quality schools. Schools often attract stable, hardworking tenants that will likely pay on time.

Understanding the Role of Landlord

There are two major ways to prosper from owning rental property. The first is to buy the home at a significant discount and then sell the place at a profit after the home has appreciated. The second way is to have positive cash flow. The second method takes considerable planning. Just because the tenant is willing to pay more per month than the actual mortgage payment, it does not mean that the home is profitable. There are other items to consider such as regular maintenance and repairs.

Determining What to Charge in Rent

Appraisers and real estate agents can provide information about rental rates for a certain area. This gives the investor some idea of what can be charged per month. The monthly mortgage amount and allotted figures for maintenance should be subtracted from the rent. There should be at least 15% left over after subtracting the payments and expenses. Otherwise, you run the risk of losing money.

Choosing Tenants

Once you have some interested parties and they seem capable of paying the rent it is time to begin the screening process. Experienced landlords hold fast to the rule of checking out prior landlord references as well as the tenant’s credit file and even a criminal check. The criminal check could spare you from inadvertently leasing to a felon and finding major damage to your home due to a police raid.

Research the Possibility of Using a Rental Management Firm

Some companies specialize in managing properties for investors. These firms will review applications from potential tenants, handle collecting rent payments and, most importantly, take care of the maintenance issues that pop up at the most inopportune times.

For instance, if you get a call in the middle of the day that a toilet is leaking, can you leave work and fix it? If you get a call at 2 am on Saturday morning notifying you of a sudden hole in the roof, are you capable of fixing that problem? Some people have the skills and time to manage these issues, but most people do not. In these instances it is a good idea to use the service of a reputable management firm.

Investment/Rental Properties (5 Part Series)

• Preparing to Purchase that First Rental Home (Part 1 of 5)
• Adding the Title of Landlord Behind your Name (Part 2 0f 5)
• Rental Property is Still a Safe Investment (Part 3 of 5)
• How to Pick Profitable Rental Properties (Part 4 of 5)
• Success Plan for Investing in Rental Property (Part 5 of 5)