Most real estate investors start their career off my investing around where they live. You can venture out when you have more experience. The reason behind investing in your back yard is because we feel more comfortable with the areas and have a better sense of what is going on. It is also easier to get local real estate information that we need. Investing in your local market is also cheaper to start out, there is less travel costs, you can see what you are buying and it may give you a feeling of comfort.
Pick Your Target Area
First you have to decide which part of town is the best place to invest in. This can be determined by what kind of real estate investing you choose to do. I have not gone over the types of real estate investing but some include rehabbing (fixing up and selling), wholesaling (finding deals and selling them to other investors), buying to rent, and there are a few others. These are the real estate strategies that I use for the most part. When looking at the market you need to see where other investors are buying their houses. The best deals will be found in low to middle class neighbors hoods. By low income neighborhoods I don’t mean drug infested war zones, what I mean is blue collar safe neighbor hoods that might have older houses and houses that are not on the higher end price side. Now you can find deals in the higher priced neighbor hoods but most will be in the low to middle income neighborhoods. When looking where others are buying ask local realtors, other investors or appraisers.
When talking with investors ask them several questions such as what neighborhoods they prefer, what type of houses they buy (3bed 2 bath), and what they do (rehab, rent, wholesale). You should not look at other investors as competition but try and work with them.
Types of Markets
There are different types of markets such as appreciating markets, flat markets, and deprecating markets. Appreciating markets are markets that there is no enough houses or a very high demand for houses which causes the price of houses to go up. The reason there is a high demand for housing can be because of job growth, a very appealing area, or several reason. Flat markets are markets that have no or very little growth. This means that there is not a lot of demand; buy just enough to fill every ones needs. Depreciating markets are where there is a lot more houses than people to fill the houses. This causes house prices to start going down. This can be because of a large employer leaving the area, a natural disaster or just over building. There is an old saying buy in a bust and sell in a boom. In depreciating markets you can pick up several deals, while in appreciating the house prices are going to be much higher and harder to find great deals. The deal will still be out there you just have to know where to find them.
Learning you market is another key to becoming successful. Real estate Brokers and experts in your area can be the best source of information for you. Learn to use them to find out what kind of market you are in. If you are in Billings Montana we are in a pretty stable market. Billings Montana has not seen the ups and downs that other markets have experienced. I will have to say that I have been noticing a little bit of a downward trend but not much, the Billings Market should stay stable. Once the first time home buyer credit is over with we might see a little more decline. Every market can vary by neighborhood, so make sure you know you market well. I have seen the same houses just one mile apart selling for totally different prices.
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