Selecting the Neighborhood
Researching the characteristics of a property’s community or neighborhood is an important step in your decision to purchase a fix and flip project, or any real estate investment. This research will include reviewing data from online sources and a site visit to the property. The importance of personally visiting the site at this stage cannot be minimized, as there are some aspects of a house and its surroundings that can both greatly affect the final value and be difficult to detect solely from online research.
Here are some things you’ll want to find out about the neighborhood:
Are Your Comps Similarly Situated?
Drive by each of the properties you’ve chosen as comparables to see if the properties and locations are truly similar. One of the hardest things to determine from a map are the informal division lines between neighborhoods, especially in more urban areas. In these areas, the quality of the neighborhood (and the associated property values) can vary greatly over short distances, and some of the biggest mistakes we’ve seen involved unknowingly buying a property on the wrong side of such a division. Your real estate agent can help you identify these features, but we strongly recommend that you visit the property and closely observe its surroundings to identify these issues yourself.
Are the Surroundings a Problem?
Is the property impacted by its proximity to a highway, railway, factory, power plant, gas station, or other undesirable neighbor? Are the neighboring houses well-maintained? We once saw a rehab where, upon visiting the property, the buyer realized he need to budget several thousand dollars for a new fence in the backyard to block the view of a neighbor’s overgrown and debris-filled yard.
Is the Neighborhood Safe?
Review online crime statistics, but also drive around to get a feel for the neighborhood. Also, don’t just do this during the day while everyone is at work or school. Neighborhoods can have an entirely different character at night, so be sure to visit at multiple times throughout the day.
Do the Neighbors Typically Own or Rent?
If the neighborhood is primarily occupied by tenants and you’ll likely be selling the property to an investor (or if you’ll be renting it out yourself), certain upgrades that would appeal to a homeowner, such as upgraded cabinets or countertops, will likely yield less value upon the sale of your completed property.
What Do the Neighbors Say?
By visiting the neighborhood, you’ll have the opportunity to talk to some of the neighbors and learn first-hand information about the property and the neighborhood. As a bonus, you may find a neighbor who is renting and wants to buy a house in the area, or knows someone who may be interested in buying in the area – finding yourself an easy buyer before you’ve even begun.
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Thinking about a new fix and flip project? Ready to get an approval? We want to make your life easier with our flexible process and knowledgeable staff. Get started with our online pre-approval and you’ll be one step closer to a fast closing.
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