Getting to know area by seeing 50-100 properties?

Question

Hi,

I have a little experience in multifamily, but am interested in single family homes that might work as rentals.

I read Mike Zuber's BP article, "What Would You do if You Were Starting to Invest in Real Estate Today?" in which he says to start out in an area, one needs to see at least 50 properties to get a feel for market values/rental rates, etc and to begin collecting data on an area.

I don't have a problem with pounding the pavement and doing the research, but I'm wondering what this entails.  Does it merely mean finding properties and driving past them and researching comps and rental rates on your own?  I assume it does, but. . . .

. . . does the researching of all of these properties require a visit inside with a realtor etc?  I would prefer seeing the properties inside and out, but what realtor is going to show me all of these properties?  I'd feel like I'm wasting his or her time. . .

What's the preferred method?  A combination of the two above by working on your own and with a realtor from time to time?  I'm probably missing something here!  Thanks!

Michael Power · Answer

Looking at properties is certainly one way to become familiar with the area.  But you need to do more....a lot more.

Get to know other REI in the area and here on BP.  Look at the types of properties that move in your market and how they perform.  Examine the demographics, (Orlando is pretty easy), and target that market.

Consider your exit strategy, (Buy/Hold/Rent, flip, wholesale, etc).

Getting to know a trusted realtor works very well.  If you are loyal and he/she committed, they will point you in the right direction when you are ready to buy.  Those are the ones you should be looking at the inside of.

Get to know the wholesalers in your area as well. Without saying, the internet is a wealth of data for research.

There is a lot more to contribute to here, but I will let others add some.

Mike P.

Michael Quarles · Answer

50 Houses seems like a bunch of wasted time...

Absolutely it is important to view Just Sold and Actives in the area youre going to market too however that is done on a regular basis in the beginning and as you have opportunity.
I call it doing a 12-pack.

Visit 3 Just Solds, 3 Active Listings and the 5 neighbors around the house (3 across the street and those on either side)youre hoping to buy and ask some specific questions.

This info gives you some very important informaton when making an offer to buy.

Good Hunting

Jon Klaus · Answer

I like slowly driving a neighborhood with my iPhone.  I check out Realtor.com and Zillow as I drive (park).  Sometimes the county tax website.  I make notes on properties I want to do more research on and call agents to ask about their listings.  
If you can find a talkative investor who works the area, you've found gold.  You can learn a lot in a few hours.

Palmer Wilkins · Answer

Great advice and info Mitch.  Have been doing a lot of driving around and keeping a lot out for the things you mention above.  Much to be done still.  Thank you!

Palmer Wilkins · Answer

Thanks Mike for the info.  I like your suggestion/information concerning researching performances and trends of particular properties and demographics.  Definitely a great idea.

I am in the process of networking with others in the Orlando area.  Still a long way to go.

Thanks for the information.

Mitch Kronowit · Answer

I agree with Mike. Just looking at properties isn't enough. Walking around 50 houses isn't going to tell you anything about the school district, the job market, crime rates (unless the houses you're viewing have had all their windows shot out and copper stolen), etc.

I believe you can tell what you need about an area by viewing 5 - 10 properties, picking the brains of your real estate professional, and using good ol' Mr. Internet. Remember, when looking at these properties, don't close your eyes or bury your head into your smartphone on the way there (assuming somebody else is driving).

You want to be looking at all the homes near that property (those can count towards your 50 even though you won't be entering most of them). Are they in nice condition, showing pride of ownership, with small children playing in the front yard? Or are they run down, paint and shingles peeling off them, with iron bars over the windows and broken down cars parked on the dead lawn? Hint: More than one house with that yellow "crime scene" ribbon surrounding it is a good clue to turn around and leave that area. Yeah some investors get excited seeing that crap, but not me.

You want to see what kind of businesses are nearby. Are there quality restaurants, shops, and boutiques in the neighborhood with plenty of desirable employers within reasonable commuting distance? Or is the property surrounded by massage parlors, liquor stores, and check-cashing places?

I even keep a sharp eye out for other residents. Do you see moms walking their babies in strollers, children riding their bikes down the street, and guys washing their cars in the driveways or painting their garage door? Or do you see shaved heads with neck tattoos hanging out on the corner with other low-lives drinking beer and smoking?

Remember, you don't buy the house, you purchase the neighborhood.

Getting to know area by seeing 50-100 properties?

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