When new investors consult with me about getting started in the rental business, the first question they usually ask is, “How do I know where to buy?” After I ensure they have the finances for the purchase figured out, my answer is pretty straightforward:
1) Make the property within a 30-minute drive from your home. Gas is expensive, and if you buy a fixer-upper, you’re going to be spending enough money on the rehab without driving all over town to get there!
2) Check the schools and amenities in the area. Good schools and access to conveniences and the bus line attract renters and enable you to charge higher rent.
3) Stop in at the local police station and get a crime run covering the past year. Petty stuff like theft or disturbing the peace isn’t a huge deal, but if you see armed robbery, stabbings, drug crimes and worse, run!
4) Drive your chosen neighborhood at various times of day … morning, noon, evening, weekends. Notice who’s walking the street and “out and about.” What do the residents’ vehicles look like? How about the residents themselves?
5) And lastly, TALK to people. It’s incredible what you can learn this way. Talk to neighbors, tell them you’re considering buying a home there (don’t tell them it’s going to be a rental … some may suspect you’re a slumlord). Stop in at a local restaurant/bar and speak with a server or bartender who’s been there a while. They’ll be a wealth of information … they may tell you more than you want to know. LOL. But that’s okay, you’re on a fact-finding mission.
If you do your “due diligence” prior to the purchase, you won’t suffer buyer’s remorse when the deal is closed. It’s worth the time spent, trust me.
And, happy hunting! 🙂