Real Estate Investing Basics

Why & How New Investors Should Focus on Specific Target Markets

Expertise:
43 Articles Written

One thing I notice about the most successful investors is that they focus.  They focus on one strategy, focus in specific areas of a market and become a master.  This is extremely important, especially for beginners; choosing 2-3 zip codes or neighborhoods are a great  Unfortunately most beginners are open to any kind of strategy and look for deals anywhere, often leading to problems.  Here are reasons why successful investors focus on specific areas. 

Want more articles like this?

Create an account today to get BiggerPocket's best blog articles delivered to your inbox

Sign up for free
  1. Become a master – Keep it simple and focused and you can quickly become a master.
  2. Mitigate risk and minimize unpleasant surprises – Unpleasant surprises arise when doing deals in a bunch of different markets and it’s difficult to learn everything and mitigate risk.
  3. Dial in your system and team – Makes it easy for your team and system to dial it in when your targeted areas are nearby. For instance, good luck getting your property manager and contractors to go an hour away.
  4. Duplicate over and over – Once you have it dialed in you can duplicate deals over and over.

Let’s look at 2 strategies and tips to focus on specific areas, flips and cash flow.

Flips – here are tips on how to pick specific areas and focus on flips. 

  1. Mostly owner occupants – too many rentals will lower the value and desirability of a neighborhood.
  2. Pride of ownership – Focus on neighborhoods with owners who keep their homes nice and are proud to live in the neighborhood.
  3. Not too many foreclosures, properties for sale or rentals – Transition areas are fine but make sure the transition is in a positive direction.
  4. 3+ bedroom 2+ baths – These are the best properties to flip, largest amount of buyers.
  5. First time home buyer areas – You will not only have the largest amount of buyers looking at properties in first time home buyer areas but the largest amount of properties to choose from for your flips. Average area, too nice and you have few buyers and few deals from which to cherry pick the best ones.
  6. Desirability, schools, shopping, entertainment, highways, etc – All things buyers consider when choosing where to live.

Cash flow properties – here are tips on how to pick specific areas and focus on cash flow. Cash flow properties include rentals but also consider Lease Options which are a win-win for all involved and have tremendous benefits for investors.

  1. Avoid warzones – Crime and deterioration of an area will hurt your profits, avoid warzones.
  2. Section 8 areas – section 8 areas are perfect for the highest cash flowing properties.
  3. C type properties – Too nice and your cash flow will not be high enough, to low and you will have vacancy and tenant issues.  Just outside of the warzones are often perfect.
  4. Transition areas – Areas with upward potential are perfect, find areas primed for a rebound or already improving.
  5. Talk to property managers – Property managers deal with the tenants and know the numbers.  They know where the best rentals are and where they like managing the most.  They may not manage if the area is too much of a warzone.

Again, all investors should focus on one strategy, focus on specific areas and become a master.  Once you do you can duplicate success over and over.  Some investors have it so dialed in they can separate themselves from the daily processes.  These entrepreneurial investors can duplicate their strategy in another market or begin the process over with a new strategy.  I hope this helps, feel free to comment and ask questions.  Best of luck to all!

    Terry Klymkiv
    Replied about 10 years ago
    Thanks for the article, Ryan and for the tips. Choosing location is probably one of the most important things in real estate investing. Are there any other materials about choosing location that you would recommend? Thanks, Terry
    Ryan Moeller
    Replied about 10 years ago
    Thanks Terry, focusing keeps things simple. Simple is good, otherwise you spin your wheels trying every strategy everywhere. It takes a lot of work to find success but most beginners, including myself, put in about 10% of the work on each strategy and area at the beginning. Now I focus and keep everything simple. I have some guides, one on Where to Invest on my site that many have found very helpful.
    Terry Klymkiv
    Replied about 10 years ago
    Thanks Ryan, just got this and few more reports from your website. I like the information about high, moderate and low risk areas. By the way, very nice website.
    Ryan Moeller
    Replied about 10 years ago
    Thanks Terry, it has taken years to get my website to where it is at. I’m glad you find it helpful. Keep me posted on your successes!
    Dennis DennisKnows Marshall
    Replied about 10 years ago
    Yea I find myself trying to do to much sometimes. I have a probate that Im working on, Im getting ready to submit an offer for a short sale and I have bandit signs out looking for distressed sellers. I want to focus on one thing but I see so much opportunity in other things. Reply Report comment
    Dennis DennisKnows Marshall
    Replied about 10 years ago
    Yea I find myself trying to do to much sometimes. I have a probate that Im working on, Im getting ready to submit an offer for a short sale and I have bandit signs out looking for distressed sellers. I want to focus on one thing but I see so much opportunity in other things.