Quick question: How do you go about deciding which neighborhood or zip code to target? Specifically what types of indicators are you looking for to know you have a good area for deals? I live in Phoenix AZ if that helps!
Account Closed I stick with the neighborhoods that I don't have to duck to avoid bullets going down the street. I look for cars that are a few years old but kept up, yards that generally are kept and places where kids are playing ball or riding bikes. Sometimes I'll do an HOA secured area but they generally appeal to a different audience. I am into cash flow and getting the new tenant buyer quickly, so I try to keep to the neighborhoods that are kept up but not necessarily exclusive. I also take into consideration employment around the area and how far people have to travel to find jobs.
I agree with @Account Closed , we don't invest in neighborhoods with high crime rates. The tenant class will more likely give you headaches and not profits. We typically like investing in neighborhoods that we would consider living in ourselves. If it's good enough for us, then it'll likely attract tenants of a higher caliber.
We don't flip so the flippers may have different criteria. They are probably looking for Chevy in the Cadillac neighborhood.
We are not looking for killer deals either and we mostly buy from the MLS. The last house I purchased, set to close today. Comps at 250, needs about 5K in work and we paid 205 for it. It'll rent for $1400 when we are done. This one is in Mesa and Gilbert school district.
It really depends on what you are looking for and what your strategy is. We are buy and hold so we have time on our side.
Good luck out there.
Awesome! Thank you both for the info. I've been looking mainly in Chandler and Phoenix but I appreciate the perspective..I'm looking for new ways to approach this!
In addition to fundamental analysis you also need technical.
Is the area growing?
Is there a strong commercial presence?
What are the price trends?
Numbers first, visuals to verify.
I think it depends on your strategy. Are you flipping, or fix and hold? I do fix and hold, although I am a small timer. This is just my two cents.
Cromford Report provides a tremendous amount of data. I look at rent to sales price ratios, contract ratios, etc to determine the areas I target.