For beginner real estate investors, defining target areas to invest in depends on what your plans are as an investor. If you plan to flip properties, look for homes located in decent neighborhoods where it is apparent homeowners care about their community. If your plans are to wholesale properties, focus on extremely distressed neighborhoods. Of course, in order to define your target area you need to know where each of these areas is located within your prospective city.
If you are not sure where these target areas are located, then your first step will be to start segmenting the city. Follow these helpful segmenting tips to define the areas that meet your goals.
Determine the average
With the guidance of your local real estate agent, determine what the average price of a three bedroom, two bath home is in your city. For example purposes, let’s say the average price for your city is $165,000.
Do the math
Next, take the average price for your city and multiply it by 70% and 110%.
$165,000 = average price
70% = $115,000
110% = $181,500
Define your target areas
Using this information, you can now determine which areas are low income, working class, and middle income.
Below 70% of average (under $115,000) = low income neighborhood
70% of average ($115,000) = working class neighborhood
110% of average ($181,500) = working class neighborhood
110% + of average = middle income neighborhood
Whether you are familiar with the area or not, it is a good idea to purchase yourself a map where you can circle and label the low income, working class, and middle class areas based on the information you receive. Real estate agents, property management groups, appraisers, or just about anyone who knows the area well can provide you insight on where such areas are located.
Beginner real estate investors need to define their target areas to invest in. If the plan is to buy a home and fix it up for a quick turn around, the areas of target will be the working class and middle income neighborhoods. If the plan is to wholesale, the target area will be the low income or distressed neighborhoods. Never start investing in real estate before learning the area first. By following this assignment, real estate investors can go into any region, anywhere in the county, and learn the market quickly.
Source: Guide to Real Estate Investing / Rich Dad Education
Visit my Sarasota Homes for Sale website and register under the “See More Homes” section to get all of the hottest Bradenton, Lakewood Ranch, and Sarasota Homes delivered right to your inbox. Or use this form to submit a request to find out what your Sarasota home might sell for today.