How to Research Areas to Buy In....

2007 was a very interesting year for real estate. I live in Florida and we we are on the front lines of the subprime meltdown. House values were plummeting and the inventory of houses for sale was sky rocketing. Additionally, homeowners insurance and property taxes were also taking a large bite out of the inability of a single family house to produce positive cash flow. That is bad news for landlords.  I figured, it has got to be better somewhere else. There was a new term being used in the real estate circle of Florida, the term was half back. A half back use to denote a person in football, now it meant a person who moved from Florida halfway back to where they came from. Thats right, senior citizens and others were beginning to flee the state as the result of the escalating costs of property ownership and the fear of hurricanes.    So where do you go? Well, I looked at property values in San Antonio, TX because I was informed that Texas was a new destination for investors. So, I and a couple other savvy investors flew to Texas and took a look around.  In the summer of 2007, we met with 11 different builders, some local economist, and soon realized we did not do our homework. On day 1 we realized that property taxes were approximately 2.5 - 3 %! That was alarming and for a $100,000 house, you could be looking at $300 per year in property taxes. My first thought was, at least the property insurance wasnt as high as Florida. That was my next rude awakening. Insurance companies where redlining all areas in the path of hurricanes and this was beginning to affect the cost of insurance in Texas. The next knock came when we met with builders that informed us that many California investors had screwed up the market and they were weary of anyone looking to purchase their excess inventory. You see, that was our goal. We would go to San Antonio, lock up larger bundles of properties and do bus tours with buyers from California. Not! The builders had already been through this and after reviewing potential rents and property expenses we collectively decided that San Antonio was a good place for a burrito and a beer- not for our real estate purposes. We didnt do enough homework.

If youre looking at areas in the country of where you want to buy long term rentals for growth and wealth, then consider the following: Buy in areas where the population shift is growing, Physically go there and meet with the following: realtors, property managers, chamber in commerce, insurance agents, building permit department, and other investors. Youve got to be sure that this is an area that is gaining population and it will continue to grow for some time to come. Subscribe to the local newspaper and get a flavor of the business attitude. A great way to determine if an area is growing is to find out how many new properties are being built. This is easily done by checking with the local permits department and comparing new building starts for months and years prior. For gosh sakes meet with every property manager you can find. They know the good areas and the high turnover areas to avoid. Look into their actual rental properties and determine what rents you can collect. This of course will give you an indication of what price range, terms, and areas to consider.