How Do I Know My Local Market?
I am considering getting into fixing and flipping. Before I get too far into this, I want to ensure that it would be beneficial / possible in my current local market. What data do I need to look at, or who should I talk to to answer this question?
Thanks!
Jeff
Drive Your Area
After you have determined your specific area for investment, the next step is to learn that area. It doesn't matter if you've lived your whole life in the area and consider yourself the ultimate townie. Now you're going to view real estate from a different perspective, as an owner. Therefore, don't presume that just because you may have lived in your investment area for years, you can skip this step. You can't.
Identify properties in “we care” neighborhoods. Houses will be well kept, manicured lawns, no trash in area, located near shopping centers, schools, parks and churches
For your drives, you'll want to take along a map, notebook, pencil and a camera. You can develop your photos as prints and paste them into a notebook along with your notes. Or, if you're a little more technically sophisticated, you can scan your photos into a research database. Of course, you can substitute a portable computer or PDA for the notebook if you wish. You get into your car with the pencil, notebook, map and camera and, alone and with the radio off, you start to drive a section of your area. This is not a step to be rushed. Take your time. The more investigating you do the better. The more you'll be learning. At a minimum, you should plan to devote ten or twenty hours to Step #2. You should break this time down into one-hour segments. After each segment, give yourself time to reflect and form opinions.
As you drive, you start to think like a real estate investor. You survey the landscape. What do you like about certain properties? What do you dislike? Which properties would you be proud to own? Which would cause you to take immediate remedial action? Visually, what do you like or dislike? Can you identify areas where all the homes are single-family residences? Are other areas reserved for apartments, commercial or industrial properties? What is your opinion of each neighborhood within your area? Use your camera to document your likes and dislikes. If you see house colors that you like, take a picture. If you see landscaping or a fence or a driveway that stands out, take a picture. Start your own Real Estate Success Scrapbook. This self-created motivational book should stimulate your thinking.
When you find memorable properties, positive or negative, take notes and a picture. Which neighborhoods do you prefer? What streets look bad? What building styles do you like?
Keep looking and learning. Does the upkeep of the lawns and yards give you an indication of the type of neighborhood you are in? Does there seem to be a pride in ownership in the area? Are there abandoned cars or beautiful automobiles on the streets? Is the city or town doing its job to keep the area safe and attractive? Are there parks and other recreational amenities in the area? How do they look? What about the appearance of the schools and government buildings and houses of worship? What is your impression of the people in each neighborhood?
Add your commentary to your notebook. What do you want to know about your specific investment area? Everything. Start to learn the street, store and school names. Look for vacant buildings and vacant land. Look at For Rent and For Sale signs. Look for new construction and new developments and people fixing up their own homes.
Do you find any surprises in your area? Are all of the basic commercial services available in your area? Supermarket, pharmacy, banks, real estate offices, insurance offices, restaurants, tailors, doctors, lawyers, accountants, hardware stores. Is there public transportation? Are there major highways? Do most folks seem to work in the community or commute to work outside the area?
John, great information. Thank you.