New to Real Estate: How to Determine if the Area is Good

[Isaac Harsh]

Hello there,

I am new, and interested, in starting my journey in real estate investing. There is one question I have to start this out:

How can I tell if an area I want to invest in is declining, rising, or a poor decision. Aside from driving around, I have no clue how to tell. Or should I just pick an area I already know and go with it regardless of whether or not it is declining or rising.

[Dannielle Boozer]

Hi, Isaac!

When selecting the area, I do suggest taking the things you listed into consideration rather than just going with what's familiar. However, if you're torn between 2 great options with one being familiar and one not, the familiar one breaks the tie IMO.

If you're looking to use the property as a short-term rental, the following locations rank as the 5 best places to buy in 2018 (according to a recent report):

1. Panama City Beach, Florida
2. Chicago, Illinois
3. Napa, California
4. Tulsa, Oklahoma
5. Memphis, Tennessee

You'll also want to consider any additional costs that may be required to effectively run the rental depending on the location and condition the property is in when it's purchased; including home upgrades, management fees, taxes, insurance, and utilities.

Before you get in too deep, though, you'll want to check in on the local policies, rules, and regulations to ensure all of your bases are covered. There are some areas that do not allow certain types of rentals, or have more of a stringent process you must adhere to. You'll also want to get a full understanding of the tax implications associated with renting out a secondary home. Paying attention is always better than paying fees – am I right?

Finally, I agree with some of the other responses here, too, like taking into consideration the school district and driving around the area yourself once you have a few narrowed down. Even if your short-term focus is using it as a rental, it's good to also keep in mind what aspects will give you the most bang for your buck in the case of a future resell.

Hopefully this helps! :) Best of luck with your selection.