First of all, you want to have your properties close to either where you live or your office. Your time is valuable. You might think that driving 40 minutes is no big deal, but when you have to drive out, talk to the tenant, take care of the problem – such as posting a notice on the door and then driving back – you have eaten up an hour and a half of your time.
Now imagine you get a call from the police or fire department about your property in the middle of the night. Do you really want to be that far away?
So stick an imaginary pin in the roof of your house and go 20 minutes out in every direction. Concentrate on those neighborhoods. If necessary, go out 30 minutes.
But once you hit forty minutes or more, it’s a bigger hassle to get to and from the property than you need. There are plenty of deals around that are right in your back yard. Don’t make extra work for yourself.
An owner-occupied neighborhood is a more stable neighborhood with fewer problems. You never have control over your neighbors, but in a rental neighborhood, you have even less control over what goes on.
Rental neighborhoods are sometimes easy to spot: junk cars in the yard or cars up on blocks, bed sheets or aluminum foil over the windows, lawns not taken care of. They just look junkier than most owner-occupied neighborhoods.
Which brings us to pride of ownership.
In general, people who own a home take better care of it than people who are renting. They have a vested interested in keeping the property and the neighborhood in good shape. After all, a home is the largest investment that most people make. They want to protect that investment.
Everyone wants a safe neighborhood and has their own perspective of what a “decent” neighborhood is. Someone who grew up in an upper-middle-class neighborhood might be freaked out by any city neighborhood, no matter how safe it is. People who have come from a dangerous neighborhood might feel perfectly safe in an area that you think of as “dicey.”
Put yourself in the shoes of the type of tenant you want to attract, and as you look around a neighborhood, ask yourself, “Will my tenant feel safe here?” If someone doesn’t feel safe, they won’t lease the property, no matter how nice the inside of the house is.
JC Underwood is the executive director at the Metrolina Real Estate Investors Association, which provides education, mentoring, and networking for real estate investing in the Charlotte region. He can be contacted at [email protected]. For more information, visit www.MetrolinaREIA.org.