The importance of choosing the area - parameters for improving success rates

The importance of choosing the area (or - things you see from there can not be seen from here)

At the beginning of my career in the US real estate world, I operated without enough tools and professional knowledge, so I also made mistakes. As I went deeper, I learned, I got to know the area where I invest, I built a local, professional and reliable team that includes real estate agents, field people, contractors, management companies and more, with whom we invest, exclusively in properties that have undergone comprehensive environmental testing. And the population, for us and for our investors.
One of the most important things in purchasing an investment property in the US is the quality of life of the population, and the environmental data of the property.

why is it important?
When purchasing an asset in an area with low residential demand, or property located in an area with a weak population, it will be difficult to rent the property.
Even when the property is rented out, there are high chances that at some point the tenants will stop paying, and you will have to evacuate them. On the way, you will lose a few months of rental, and you will also have to invest more money in evacuating the tenants (although there are insurance policies), renovating the property and preparing it for the next tenant, so that in the end, the real yield will be significantly lower than what you expected.
In addition, it will also be very difficult to sell the property, at least at a price that will pay you.

One of the benefits of investing in real estate in the US is that all the data is available, you just need to know what to look for and where.
There are a number of very important parameters that directly affect the success of the investment:

✔️ What percentage of the houses are inhabited in the vicinity of the property - a significant percentage of vacant houses (over 15 percent) indicates problems in the area, lack of demand for housing in the area, and therefore future difficulty in renting or selling the property.

✔️ What percentage of the rented houses out of all the inhabited houses - a high percentage (for example above the average in the city / country in which you invest) reflects an excess supply of apartments for rent in the area, which causes rental prices to fall. In addition, tenants sometimes worry less about the exterior of the property, which can make the neighborhood look less good, resulting in a drop in house prices in the area. Unless it is for example an area close to the university, and characterized by a high percentage of tenants due to the large number of students, this is an indicator that can light a red light, especially if looking for a property whose desired target audience is established families who will live in the property for many years.

✔️ What is the average annual income per family in the area - low income indicates a weaker population, a population that will have difficulty “finishing the month”, and therefore will have difficulty meeting the monthly rent payments.

✔️ What is the change in average family income in recent years - is there an increase in the standard of living and quality of the population, above the average change in the city / country? This indicator shows whether the quality of the population in the region is improving, and whether it is entering a population area at a better socio-economic level, or that the population is stagnant and is actually going backwards.

✔️ What percentage of the families in the region are below the poverty line? What are the unemployment rates?

✔️ and a variety of other parameters, such as school levels, crime levels, positive / negative immigration and more…

An initial examination of these parameters and more, will teach you in the best way about the property environment and the quality of the population and the area. These are things that are far more important than expecting one return or another, because in the end, when investing in a bad area, the real return will be significantly lower than you expected. In addition, in the weaker areas, there are usually no price increases, unless it is a growing area, which is currently characterized by a weak population but is expected to change over the years, but these are things that can only be known when living the area…

Link to the original post on the United States Real Estate Forum on Facebook - Works on a desktop computer:
http://bit.ly/2Ig0XU9

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