How to market research if a emtpy duplex will have renter

Question

Hi,
I am thinking of buying a duplex in an area I am not very much familiar with. Before buying I would like to market research that the empty duplex will really be rented and not vacant so that I can have a decent investment. What is the best way to research this. Thanks.

Jon Holdman · Answer

Drive the area and look for for rent signs.  Call and find out the rents.  Watch over a month or two, and if the same signs are still there, you know you're going to have a problem.  If signs come and go quickly, you know it will rent quickly.

Jack Srimani · Answer

Thanks Ralph and Tod for further clarification.

Tod R. · Answer

Jack, I think Ralph and Jon are correct.  You need to see and understand the property and neighborhood yourself.  If you are going to have trouble visiting the property to do your due diligence as well as managing it, you may want to look at areas more convenient to your location.  There has to be good investment opportunities closer to you, but you may have to be patient and persistant.  Also, if you start in areas that you are familiar in, you will immediately have a better understanding of the market.

Welcome and Good Luck!

Jon Holdman · Answer

I strongly recommend you jump in your car, drive over, and have a look.  If you don't have a trusted resource local to the place, you MUST have a look for yourself.

Ralph S. · Answer

I don't use the crime index, I check the local PD website, like I said.  Every city will be different as to what they offer.  Call their non-emergency line or community affairs office and see what's available.  Landlord associations or Real Estate Investment (REI) clubs in the area would be a good place to find others who are investing in that area, and would be a good source of where to buy, where not to buy.  It really can be a street by street, block by block kind of question.  Not just for crime, but for comps as well.  I had a duplex, right across the street from a newly renovated and sought after primary school and around the school there was a high police presence.  It attracted the best of the low income rental crowd.  My first tenant, who stayed six years, moved from just three blocks up the same street after she woke early one morning to "Police! Freeze!  Don't shoot, don't shoot!"  A drug dealer was getting busted right outside her bedroom window.

If you're 3.5 hours away (I'm guessing around 200 miles plus), then management comes into play.  Will you manage it, or get a property manager?  There are a lot of threads here on BP about being an out of area landlord.  It's tough.  Getting a PM can make a good investment average, and getting the wrong PM can be a disaster.  Do a search here for "long distance landlord" or "distant landlord" or "Property Manager" and read what has already been written on the subject.

I'll invest in the hood, a low income rental neighborhood, but not war zones.  To me a war zone is most easily identified by the number of boarded up buildings on the street.  But, like I said, the difference might just be a block or two in any direction.

Jack Srimani · Answer

OK Ralph,
Thanks again for the new piece of information. The place is 3 and half hours from where I live. Do I have to check  some local resource to see how well it will do for renting. Also if the crime statistics is 4/5 would you invest in such area. Please let me know. Thanks.
J

Ralph S. · Answer

Jack
Like I said, I can't vouch for ziply.com accuracy, and I give it "directional" credit, at best.  Some of the information could be sourced from the 2000 census for all I know, and is 9 years old.
Also, "neighborhood" data could be vastly different and I've found when looking at their population information for instance (46,557 in this case) is not neighborhood by my definition.  I've also observed around here, middle class, hoods and a war zones could all come back with the same crime rate indexes of 5/5.  Again, this could relate to a large area they consider a neighborhood, and not the specific area you or I would be looking at.
I usually pay more attention to the vacancy rates and rent comparables, since this data is displayed on a map and they cite the source.  I use other local resources to verify other data.  Norfolk, VA Police have a slick website that actually maps crime over the previous 90 days, using symbols to identify the type of crime committed.  You can zoom in on a specific address, cross street or subdivision, and specify a variety of variables and it'll map it out the way you want.  So, I wouldn't rely on Zilpy as a sole source.

If you're not close enough to regularly observe for rent signs as Jon suggested, I'd think twice about investing for that reason.  How far is it?

Jack Srimani · Answer

Thanks Ralph and Jon for your valuable advise. I apprciate it. Since I am not from the area it will be difficult to check out rent sign  on a regular basis. Ralph I got some information from the site you recommended. Forlks the following is the statistics of the area. Does this seem terrible place to invest when you are looking at the following statistics. I would like to know your opinion on this. Thnaks

Typical neighbor is predominantly of White ethnicity, majority attaining High School education level and generates about $33,986 per year in household income.

Renter occupied: 41 % 
  Population: 46,557 
  Vacancy rate: 6.1 % 
  Median household income: $33,986 
  Monthly rent affordability: $849 
  Crime rate index: Violent: 4, Property: 5 (1-lowest, 5-highest) 
  Ethnicity: White (92 %) , Black (4 %) , Hispanic (3 %) 
  Age groups: Under 18 (24 %), 25 to 34 (16 %), 35 to 44 (14 %) 
  Education: High School (49 %) , College (8 %) , Graduate School (4 %)

Ralph S. · Answer

Hi Jack, and welcome to BP.

If you're trying to research area rents, you can try the local paper classifieds to see what similar rentals are renting for.  I also use zilpy.com, which is kind of an internet spider - it gathers rental rates and other stuff like crime rates, vacancy rates, and neigborhood demographics from other internet based sources.  Can't vouch for it's accuracy, but I use it as an indicator.
If you haven't started already, do a lot of reading right here on BP.  Good luck.

How to market research if a emtpy duplex will have renter

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