When choosing your target market, I highly suggest you invest in your own backyard starting off. By backyard, I'm referring to investing in areas within 30 minutes to an hour commuting time of your house. By investing in your own backyard, you should be familiar with the neighborhoods nearby. You should have some type of idea as to whether you are investing in an "A, B, C, or D" neighborhood. This ranges from highly affluent areas with lower cap rates to war zones or older areas with lower income families with higher cap rates. Starting out, I invested in "C" and "D" neighborhoods. Now, I invest in emerging markets.
Emerging markets are markets with job growth-for where jobs are, people will follow. I advise against investing in high crime areas. I do own several multi-family properties in low income areas, but they are not in high crime areas. Use Census Bureau data (factfinder.com) and contact the local police station to ask about crimes reported at the potential multi-family house you are interested in acquiring as well as in the neighborhood. If you hear of repeated break-ins, violent crimes, drug activity, etc. then these may be areas you want to stay from in the beginning of your real estate career.
When you get experience and want to invest outside of your backyard, then you may want to invest in emerging markets that give you the highest return and hire a reputable property management company to manage your multi-family properties you acquired with business credit. Sure, you may be a control freak and want to be able to go to your multi-family property in a matter of minutes, but having multi-family properties far away from you stretches your entrepreneurial skills. Here are things to look for in regard to investing in emerging markets:
*Job Growth-companies moving into the area *Growing appreciation rates-check Office of Federal Housing *Ask economic development council for their five year plan for the area you're interested in. *Check citymayors.com for the fastest growing cities. Where there are jobs, there is population growth. With population growth, inventory can become scarce and real estate prices begin to rise.
If you find a multi-family property in which the numbers work, ขายบ้าน make sure you visit the property with a property inspector and potential property managers. Ask the tenants and neighbors about the property and neighborhood to get the scoop about what's been going on with the property. Investing is risky, but make sure you take calculated risks and do your research.
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