Getting Started in Real Estate Investing: Searching For a Property
Excerpt from my new book: Building a Financial Fortress: Getting Started in Real Estate Investing.
Identifying market areas
Before you start your property search, you should get out a map of your local area and review the best areas to own property. It’s best to do this with your real estate agent, since they are likely to have the area knowledge and can also perhaps identify specific neighborhoods or projects that might be worth looking into. Make sure you have clearly identified the geographic areas you are interested in by circling on a map and don’t deviate from your overall strategy, even if you have a hard time finding properties that meet your criteria. More properties are listed every day!
Location, location, location
These are a few of the considerations when you are identifying areas to target your property search. The old saw “location, location, location” should be at the forefront of your mind.
· Quality/proximity of schools
· Retail proximity· Public transportation· Jobs· Amenities (parks, civic or community centers, trails, etc.)· Neighboring land uses (i.e., multifamily, single family, industrial/commercial, etc.)· Impacts – (i.e., drainage channels, high voltage lines, rail lines, proximity to freeways, etc.)
Search tools
There are many free search tools available online that allow you to customize settings and get information as soon as the MLS is updated. My favorites are Redfin and Zillow but there are many others to choose from. Your agent may have access to a proprietary system through their brokerage that provides additional tools – make sure you ask about that. If you setup your search, you will be notified as soon as there are any new listings in the area, product and price range you are interested in.
Off-market opportunities through network
One of the advantages of building your team is that they can help you connect with a network of real estate professionals including other agents and property managers. Through that network, you may become aware of opportunities to buy property before it hits the MLS (“off market”). These are rare, but do provide an opportunity to get a property without having all the hassle of having to deal with multiple buyers.
Stay close to home when starting out
My recommendation for your first property is that you stay close to home and find a property that is within a half hour drive of your primary residence.
I think that’s a good idea for a number of reasons:
· Your market knowledge is likely to be the best in your immediate area and your chances are better of finding a good property in a good area that meets the “location, location, location” criteria above
· It’s easier for you to manage the initial renovation of the property when you purchase it or even do some or all of the work yourself prior to turning over to property manager
· If you choose to self-manage the property, it’s a must· You can keep an eye on the property and can easily get there if there is a major issue (as a practical matter, the property manager will be responsible for dispatching a plumber or electrician, if needed, with your consent for emergency repairs)When I purchased my properties, I drew a circle around the main employment centers in my area and looked for properties that were close to the perimeter of those circles. The properties were close enough to the employment centers to benefit but far enough from the center to allow for a more reasonable purchase price.
As part of that process, you will begin to identify certain neighborhoods and within those neighborhoods certain condominium projects popular with investors that might be worth monitoring.