Here we go again.
Don’t you just love it when someone asks your opinion of something that you actually happen to know a LOT about, you give them the answer, then they proceed to argue with you?
It happened to me again last week.
And unfortunately it was one of those I-already-made-the-decision-so-I’m-only-asking-you-because-I-want-to-validate-in-my-own-mind-that-I-was-right kind of questions.
I’ll spare you the details, but the person bought a trashed out house in a marginal area that he’s planning to fix-up and rent. He bought it because he couldn’t believe that the house was THAT cheap.
I didn’t have the heart to tell him that it was because nobody else wanted it – because it was in a bad location.
So I thought that I would take the opportunity to discuss what I consider CRITICAL SUCCESS FACTOR #1 in being successful in owning rental real estate.
And that’s LOCATION.
You can’t fix it.
You can’t change it.
And you can’t convince anyone else to like it.
So don’t buy in those areas.
Here’s an anecdotal research technique that I used a while back to determine the good/bad line for location.
I have taken almost a couple of hundred applications for my rental homes, and what I have done is driven by the homes and apartment buildings that these applicants were moving from.
I looked at their dwellings, I looked at the areas, and I even made appointments to see some rental homes and apartments in those areas.
Because I COMPLETELY understood what my tenants were moving AWAY from.
Once I understood that, then the location decision was a no-brainer.
This works because it’s simply a variation of the strategy of finding out what your customers want and giving it to them.