What To Look For In An Investment Property Neighborhood - HardMoneyHome.com Private Lending Blog

What To Look For In An Investment Property Neighborhood

| Posted in General Lending

November 11, 2021

When looking for areas to buy an investment property, it’s critical to look at a variety of different factors when making such a big decision. Picking a community and home you want to live in long term is quite different from choosing a house for someone else to live in. While many investors look only at the property, the most successful investors consider the type of person who would want to live in the neighborhood where the home is located. Smart investors look for homes that will give their renters a certain quality of life. When looking for your next fix and flip opportunity, consider the below location issues before moving forward with a new investment project.

Consider HOA Restrictions

While most HOA’s allow most any qualified renter, sometimes they may require additional interviews or steps to approve people for a particular neighborhood. Unfortunately, some HOA’s policies can go to extremes in an effort to create a more appealing and safer environment for the community. These policies can lead to unnecessarily strict rules that must be followed or fines can be issued for even the most minor offenses, such as putting the trash cans out a few minutes too early on trash day. It’s important to understand all the fine print of any HOA restrictions a neighborhood may have before agreeing to purchase a new investment property in the area. Not understanding these rules is one quick way to ensure a lot of headaches and complaint calls from your future tenants down the line.

Appealing Location

Is it in a location where tenants would want to live? Renting out a property in a desirable neighborhood with beautiful things around it helps possible renters say yes. Additionally, when you’re looking at short-term/nightly rental options, an appealing location where people would normally travel to for vacation is also a good investment. Just because you find a good deal on a property doesn’t really mean it’s a good deal if no one would ever move there.

Local Attractions

Are there attractions nearby that lots of people what to see? Are there amusement parks, nature trails, or other live music venues? Your rental property should be near things that someone would enjoy experiencing. This is especially true for short-term rentals. When people are planning a vacation, they want to go somewhere with different attractions close by so they can take in the highlights of whatever location they are visiting.

Home Amenities

What amenities does the house itself feature? Is there a pool, hot tub or firepit with outdoor spaces with plenty of seating to entertain friends and family? Are there smart home features available? Does the home feel cluttered or does it create a natural flowing environment? Is the backyard fenced and private or is it open? These are just some of the home amenities to consider as you think about the kind of property to buy.

Rate of Turnover

When looking for a new long tern rental property, you should look for a location where there is likely to be a good amount of turnover each year. This means that there are always new people coming and going who would be qualified to rent your home for a 12-month lease or more. In areas near colleges, universities, and military bases, you’ll be more likely to find the most possible renters as compared to a small town too far from employers and amenities. The turnover rate should be due to relocations or college students graduating and not because crime rates have skyrocketed in the area.

Crime Rates

Crime rates are perhaps the most important. You’ll want to not only look at the overall rate but the types of crimes being committed in the area. Some areas have domestic disputes and not very many crimes from outside the home. Other areas have much higher rates of theft and vandalism, while still others might have an issue with burglary and more violent crimes or gang activity. For this reason, it is very important to look at not only the crime rates, but where the crime is happening, how frequently it occurs, and if the issues have been resolved in recent months.

Neighborhood quality is one of the most important criteria for prospective renters and unfortunately is often over looked by investors looking to do a quick fix and flip and make a fast buck.  Using the above guide will hopefully be useful in considering other important factors to consider in order to be successful long term with your future investment portfolios.

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