Micro - Location Evaluation

3 Replies

Hi All and Happy New Year!

I would like to know how those of you evaluate the location of your investment property? Ignoring all other factors, let's assume the subject property passes all the other due diligence.

I am interested in how detailed you get. Do you pull crime statistics? Demo/Income stats? Local commercial growth? Other property on the street? Do you weigh any one statistic over another? 

It's one thing to say "I am looking at a property located in XYZ Metro" and another to say "In XYZ Metro, how poised is this sector of the city or this neighborhood for growth?"

Would love to hear your opinions! Thanks

@Z. Otto Bonahoom  

There are many on the forums with more experience than me in this matter. Since all of my investments are out of my immediate area, my main thing is to hear good testimonials and feedback.

- Crime.
- Local schools and ratings (key for properties targeted at families).
- Multiple sources of employment in the region, particularly for your target tenant (A's: White collar jobs, B's: Consistent working class, C's: Consistent working class/service sector).
- Homeownership rate (US Census has this for all cities, Fort Wayne for example)
- Check out local rent prices on Padmapper or Craigslist, just to see if your expectations for rent rate are real.
- You can check for market volatility using a variety of sources. A good simple example is NPR's: How Much House You Can Afford. Fort Wayne, for instance, is very flat... which is a market characteristic I like (no major surprises). 
- In the Northeast we put a huge emphasis on transportation availability. As an old friend used to say: "Your tenants only pay rent if they have jobs, they only go to work if they can get there, they only get there if they have transportation." This is less true for many markets, but people in NY, NJ, and CT live by this mantra.
- Political environment is important for estimating taxes. The Northeast is another great example of a place where the political (read: Tax) climate can ruin a completely good deal. There are devastated towns in New Jersey that attract no investors because of their ridiculous tax assessments.
- Could you live there if necessary? This is a question I ask myself towards the tail end of evaluating a market. There are obviously places I would prefer to live, but if I could 'never'  (in any case) see myself living somewhere, then I probably should not expect my tenant to do likewise.

@Trevor Ewen Really good list. This is exactly what I was looking for, thanks! 

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