How many towns/neighborhoods should you know when starting out? How do you know when to move on to analyzing a new town because the one you have been looking in is very difficult to find reasonable deals?
@Christopher Prince-Barry Welcome to BP!
I think it's important to know your immediate market almost block for block. Personally, the best time to move on is when you take down at least one deal in one area.
Hope this helps. Goodluck. Thanks! - Ola
In J. Scott's book on flipping houses; he says you should focus on your immediate zip code/town; you probably know way more about your neighborhood than anywhere else. He advises to focus on a farm area around 5 sq miles or less and population of 10,000 or less.
Once you have statistically analyzed several towns that you are considering. Take your preference and create your "farm." This can be whatever size you are comfortable knowing block for block. I have several "farms" in several towns that I constantly analyze. they are not squares or rectangles but odd shaped areas where I have determined my likeliness of the best returns. However always remain fluid in your actions. Never pass up a killer deal just because it falls outside your farm.
Thanks for the insight folks. I actually started a REI club (by accident) last week. The people who have properties know their farms like the back of their hands. It is amazing. Seems like it would take a while to know so may Street names and the details of each block. That won’t stop me though!
@Christopher Prince-Barry great tips here. I’ll add that it’s probably more important to know where a market is headed. Getting in touch with economic development clubs and reviewing building plans and areas of emphasis allow you to find the path of progress while others just focus on the block they know. Neighborhoods change...make sure you pick an area based on where it is and where it’s headed vs. where it was or lagging perceptions.
@Christopher Prince-Barry Some great points raised here. I would add, in agreement with @John Casmon that it is imperative that you get in touch with economic development clubs to review building plans, etc. I would also suggest getting in touch with the local Chamber of Commerce and the City's Planning Department, as these can be very good resources.
I would also add that before deciding your market, it would better to realize how do you want to invest - turnkey, finding/purchasing on your own, syndications, JVs, partnerships, etc. You will also need to figure out your budget and constraints. For instance, if your budget is $50K but you want a Class A property only because you're a busy professional, then certain markets will exclude themselves.