Before you invest in real estate, it's a smart idea to get to know the neighbourhood you're investing in and get a feel for the market.
To start gaining market area knowledge, walk around the area and make note of "For Rent" signs, calling to learn more (price, amenities, anything they emphasize); and then keep checking back to make a note of when the sign comes down. Be on the lookout for "For Sale" signs and do the same thing. Go to open houses. Speak with local real estate agents. Speak with local property managers. You can even chat with people you see on the street.
The whole time you are trying to find out:
- Who is a typical home owner in this area?
- Where do people work?
- Where do the kids go to school?
- What do you like best about this area?
- Anything to watch out for in this area?
- What would my target property type rent out for?
And, of course, collect the "Property Sold" data for the area. Most real estate agents have a system whereby they can send you an email when a new listing, a price change, or a home sale occurs in your target area. This is enormously useful for keeping tabs on the market activity.
Once you've got your submarket picked out, and you've dedicated time to getting a strong sense of who lives in that area and why, the house prices, the rent rates, the amenities in a home that are important to buyers and renters, the things that make a house in that area harder to sell or rent and you've physically seen at least a dozen of your target type homes all you need to do is monitor the area.
This is an edited excerpt from the Amazon #1 bestselling book More than Cashflowby Julie Broad. You can get your copy and get more valuable investing advice from Julie at revnyou.com.
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