Today I would like to share with the BiggerPockets audience a systematic technique I use to vet low priced/high cash flowing neighborhoods:
The Leveraged Analysis Technique.
This process leverages the available resources so we can find safe Working Class Neighborhoods (WCNs), as well as cut our search time in half by not wading through duds.
The analysis is powerful because it uses the right metrics for analyzing properties, ignoring the metrics that just waste time. For working class neighborhoods, these Crucial Three Metrics to save time and money are: Crime, Photo-Counts, and Rents (C.P.R.). See the video below for exactly how I use this technique:
No, its not schools, and that’s the difference: For this demographic you need to know what the indicators of stability are, and knowing these nuances can help make your analysis more applicable and accurate to this market. This technique has worked very well for myself in this niche, and from feedback on BiggerPockets, it has been very helpful for others.
Now, unlike before, there are systematic ways for you to be an informed real estate investor when diversifying your portfolio by going into low income neighborhoods, which will minimize your risks and make sure you’re only spending time on the properties that really matter. Now the real magic can happen!
In conclusion, when someone who is new at real estate investing is mentioning a house where the property prices are very low, the first response should now be,”What does the crime rates, photos, and average rents of that neighborhood say about the property?”
Photo Credit: Stuck in CustomsHow to Find Great Working Class Neighborhoods to Invest In Using The "Leveraged Analysis Technique" by Lisa Phillips