Where should you buy in real estate investing?

Identifying the right markets to buy in using real estate timing is the first step of buying.

Once you have identified a market however, you need to select where you want to buy your real estate investment. All real estate markets have different neighborhoods, some more desirable than others.

There are two good ways to select the right neighborhoods to invest in once you’ve identified the right real estate market using real estate timing. These aren’t the only ways, but they are good methods for smartly selecting where to do your real estate investing.

The first way is to buy where there are good schools. Most MSAs have different school districts, especially the larger ones. But even the MSA where I grew up, Ann Arbor, which isn’t huge still has multiple school districts: Ann Arbor, Ypsilanti, Saline, Dexter, Chelsea, Willow Run and so on. Some of those schools are very good and some aren’t so good. School districts can be very reflective of desirability. If you buy close to good schools you are going to have more people wanting to rent your real estate investment during your hold period and you are going to have more people wanting to buy when it comes time to sell. There is a trade off however, in that the areas with the best schools are also likely to have higher prices. So you’ll need to find a balance between schools and affordability. You certainly don’t want to be carrying a large negative cash flow during your hold period. I hate negative cash flow!

The second way to buy is to look for up and coming neighborhoods. If they have good schools that’s always a bonus, but in the up and coming neighborhoods you are more likely to see a younger crowd who is more interested in the quality and quantity of amenities, because most of them don’t have children yet. Neighborhoods that are starting to see revitalization are great for this. These buyers tend to prefer smaller, starter homes or even condos but they want lots to do around them. Coffee shops, nightclubs, theater, arts, music and so on. This is a kind of emerging market investing. When the real estate timing is right and this type of neighborhood is up and coming you’ll see a rapid upswing in desirability.

Once you’ve identified the market you want to invest in you need to start doing the research to select the right area within that market. The internet is a great asset to get you started. I also recommend talking to some real estate agents. Ask them about neighborhoods and resources to find out where the good schools are, where people want to live and so on.