One of the most important decisions you will make as a real estate investor
is the location of the property. If you select something in an area that is
already hot, you could end up paying entirely too much for it. If you buy a
house or an apartment complex in a rough area of town, you may have trouble
keeping it occupied by tenants you can trust.
Finding the balance between the two possibilities doesnâ€™t have to be as hard as it sounds, though. You can be a landlord in a safe neighborhood that is gaining popularity in the city, and that will put you in a great position to make quite a profit when the neighborhood finally reaches its full potential.
These neighborhoods where you should concentrate your efforts are called transitional neighborhoods. Transitional doesnâ€™t necessarily have to mean that the area is moving from a bad reputation to a good one, though this is often the case. In many cities, the historic areas just outside the downtown have become run down and sometimes dangerous.
The current trend is to take those areas back, restore the beauty, and install excellent commerce. If you manage to catch one of these neighborhoods in the beginning stages, you can get a great deal on property to purchase. You will also be able to find plenty of people to buy or rent your property, because people will be clamoring to live in the hot new neighborhood.
Finding a neighborhood at the right moment of transition isnâ€™t easy. Sometimes you can buy too soon, only to watch the neighborhood fall back apart around your investment property. If you wait too long, you could end up paying a lot more for the properties you want than you should have. Itâ€™s actually a science, determining when the areas are perfect for purchasing. Keep an eye on the houses in the area.
If owners are beginning to show a bit more pride in their homes, you can be certain a turnaround is on the way. When commerce begins to move in, especially in the form of restaurants and banks, you know the area is about to take off. Thatâ€™s the time to go ahead and buy.
Once the businesses move in and start boosting the neighborhoodâ€™s image in the city, everyone will want a house nearby. Youâ€™ll be ready to either sell them one or lease them one.