Steps to take when analyzing areas for investing?

Question

I am currently in the process of looking for a SFH to do my first fix and flip in the Chicagoland area. When analyzing areas I found that some have lots of homes that are sitting on the market and some that do not have any homes that are distressed. What are some characteristics of the area that I should be looking for before deciding to purchase my first deal? Any information helps!

Bridgette Delva · Answer

Hi @Brian Kmiotek! I don't know much about the Chicago area but for a SFH fix & flip, a few things come to mind:

Look for properties that are in historically appreciating areas.

Look for the good school zones, they will generally have a healthy amount of turnover, which indicate a healthy market.

Look for the worst looking houses in the best neighborhoods.

Check property records in your target neighborhoods to see if there are delinquent taxes or property that hasn't been sold in a long time like 20, 30, 40 years. These would be the houses you could target through direct mail letters & calling to make an offer to buy their homes.

If the area has a lot of homes sitting on the market for an extended period, it might be good to understand why. Reach out to some realtors and talk to them to get their perspective on the current market.  Probe them to find out what areas they would recommend for fix & flip.  Ask them if they have investment properties and where. If there are no distressed homes in an area, that's a good sign but makes the challenge of  finding a deal even greater.

Of course, when you do find a deal, it may go without saying but make sure you use the analysis tools to thoroughly vet the financial viability of your deal.

Not sure if this is the type of input you were looking for but hoping this helps.

Brian Kmiotek · Answer

Thank you for the advice!