Understanding What Your Market Is NOT

[Stephen Brown]

Hello BP Nation,

I've been educating myself on Real Estate for awhile now and I keep hearing in podcasts phrases that go like this:

"I just know that my neighborhood isn't a flipping neighborhood."

"It's hard to cash flow on a multi-family property in my area."

"You can't find a house purchased with a 'fill in the blank' loan/lender in my area."

"The area I invest in isn't meant for beginners."

I'm just curious, how do people come to these conclusions? Information from other investors? Past experience? Is there a way to research this?

Thanks in advance!

- Stephen

[Bill B.]

Most of them are numbers. In no particular order...

Some small multis are just too expensive To cashflow. Either investors are buying them for appreciation or to lock up the land or house hackers are doing it to save insane rent. 

Some neighborhoods aren’t good for beginners because an entry level house is almost a million dollars. Or every house in the neighborhood has lead paint, cast iron pipes, a septic system, a boiler and is 100 years old. 

Some properties can’t get loans or at least most kinds of loans because they are in a condo complex with too many non-owner occupants. 

Most of that doesn’t matter, assuming you don’t live in their neighborhood. Just research your neighborhood, run the numbers for the kind of infesting you want to do, try to get a loan for it as within a day or two you will have all these answers. You’ll know how other people figured it out and other people will hear you say things about your neighborhood. If you’re feeling generous you can state your reasons why afterwards to help the next newbie.