I began my real estate investing career 15 years ago. Actually, I backed into it. I’d been a stay-at-home mom, tending to my three teenage kids and doing artwork on the side to earn a little extra cash. In August of ’92, my 17-year-old son was killed in a car accident. Todd’s sisters, Anne (16) and Allison (14) were devastated by the loss of their big brother. We all were.
My 20-year marriage ended eight months following Todd’s death, and I was forced to find an affordable home to buy. There weren’t many in my price range. I bought a fixer-upper, which eventually led me to buying my first duplex and trying my hand at being a landlord.
I chose multi-family housing because income was my top priority and I knew I could make more money in rent if I bought a duplex instead of a single family house. But aside from knowing I didn’t want over a half hour commute to the rental, I was clueless. I knew I wanted to (hopefully) buy more than one, and I wanted them in the same general area, but how was I to find a decent neighborhood?
First, I secured the help of a quality realtor. These professionals possess a wealth of information, and you don’t pay a cent for it. They know the neighborhoods, which ones are growing, which are in decline. After you have some ideas on neighborhoods, the rest of the research is up to you. You must drive the streets, at different times: weekdays, evenings, and weekends. This will give you an accurate feel for the climate of the neighborhood. If you get the chance, stop and talk to a few of the residents of the area. Are there many rentals? If so, the stability of the area may be questionable. Have some of the homes been redone recently? The two houses below are on the same street. The one on the left will be a great buy!
Other factors to consider are the neighborhood’s proximity to schools, shopping, bus lines and downtown businesses. Does the community seem to be growing? A major concern to me was the crime rate in the area, since I work alone much of the time. I checked the crime rate at the police station.
The visit to the local police department also unveiled some additional information. This particular section of Indianapolis was part of a federal program called “Weed and Seed.” Local redevelopment agencies were teaming up with law enforcement and community leaders to rid the area of drugs, run-down and vacant houses, gun-related crimes and gang activity. Indianapolis was being used as a model for this program, because positive strides were being made. I got in on the ground floor, started buying homes in this area, and have been pleased at the slow, but steady, improvement.
I suggest you check with your local police department and/or housing agencies to see if any of your target neighborhoods are receiving funds from outside organizations. Local, state and federal monies can make a huge difference in the renourishment of neighborhoods that have seen better days.
Most of my homes are close to 100 years old. They have had the major systems updated before I bought them, but trust me, they’re sturdier than much of the new home construction we see today! Don’t be afraid to buy an old home, if the major updates have been completed.
I recommend you spend lots of time picking your neighborhood. You want to be in an area that’s growing, that has more owner-occupied homes than rentals. Again, homes that are close to bus lines, churches, good schools, and shopping will be attractive to renters. All of my rentals are within a five-mile radius, which is very convenient. If you’re buying several, be sure of your area.
I can’t stress this enough…Be smart about your choice of neighborhood. It can make or break your success as an investor!