I've been looking around BiggerPockets for a little while and haven't found much on the subject of area analysis. I'm reading a book right now(Buy it, Rent it, Profit! by Bryan Chavis) that discusses analyzing an area or neighborhood before you even start looking at actual properties and I happened to be listening to one of the podcasts today with Ben Leybovich(Show 61, I think) where Ben was arguing that you buy for location, not specifically the property.
I guess my question is, what is the best way to go about analyzing an area and at what level do you do this at(state, county, city, neighborhood)? Bryan Chavis goes over this but it didn't seem quite clear to me and I wanted to hear what everyone else does for this.
Thanks ahead of time for the replies.
HI @Chris Duzan It's more of a science than an art. I would think of what you consider a good area where you live, then try to deconstruct why you consider that area a good area. See if you can find those indicators in other areas, and speak with people in the neighborhood you're looking at to get a feel for the area.
Thanks @Jordan T. I've never really thought about what makes a good area. I grew up in the same house my whole life and then lived on campus at my college the past 4 years. So both times there wasn't a whole lot of thought put into it on my part. What would be the typical things to look for? (Crime, neighborhood appearance?)
That's a great question! To be honest, to really have an excellent level of understanding of the environment you are investing it is in your best interest to conduct analysis at all those levels you mentioned (state, city, neighbourhood). Having that knowledge can allow you to react quickly to changes especially in hot markets and allows you to capitalize more on deals that others wouldn't because you have all of that information. The most important thing though is to become an expert in your particular city/neighbourhood as real estate is very local (don't get too caught up in national averages). There are many variables to consider in this evaluation process and in addition to the things that you listed to look for (crime rate, neighbourhood appearance) here are a few more variables I would consider when assessing the an area:
- Proximity to amenities (grocery stores, fitness centres)
- Distance to public transit (ie. terminals and bus stops) and other transportation improvements
- Whether the neighbourhood as a whole is in transition to increase or decrease in quality
- Building of new infrastructure
- Moving in of a major employer
One other tidbit of advice I heard recently which I thought was great is to follow the big box stores (ie. walmart). Reason being, is for one thing they are job creators but even more than that, they sift through incredible amounts of data before they make the decision to place a store at a given location and so you can probably be sure that where those major players are headed, people and real estate demand is likely to follow.
Hey @Myles Wisdom ,
Thanks. I'll definitely have to look into those things around my area. I'm getting to the point where I'm comfortable enough to buy a house but I have quite figured out my criteria for houses and areas. So I'm just going to start analyzing the areas around me and get a feeling for good areas and prices in my range(slash figure out what my range is).
Thanks again, this was really helpful and I'll definitely keep that last tidbit in mind.
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