Location is one of many factors to consider when selecting the residential investment property that's right for you.
For many buyers, that means looking outside your local boundaries to other cities or states that better match your overall investing goals.
On this episode of the Listen Money Matters podcast, Roofstock's Director of Client Advisory Services Zach Evanish chats with hosts Andrew Fiebert and Thomas Frank about evaluating different investment property neighborhoods.
Listen to the podcast now, or check out our recap below:
Topics covered in this episode include:
- How do you evaluate the qualities of a neighborhood you're going to invest in, especially if it's a neighborhood not close to where you live?
- How Roofstock uses census-level data science to grade different neighborhoods
- The factors Zach looks for when choosing his own rental property neighborhoods
- How a lower star neighborhood (on Roofstock) can potentially translate to higher profits
- There are 5 key data points to consider when choosing a rental property neighborhood: Median home value, median income, percent employed, percent of owner-occupied homes, and average school rating. These factors help you more accurately compare the potential risks and rewards of different areas.
- There is no one-size-fits-all neighborhood: Different neighborhoods will appeal to different types of investors. It all depends on your personal investing goals and strategy. For example: a 5-star neighborhood may provide better long-term appreciation, but five stars doesn’t necessarily mean “best” for all buyers interested in single-family rentals. Other investors might prefer the potentially higher rental yields produced by properties in 2-star neighborhoods.
- Consider qualitative factors as well: In addition to using data to narrow your search, consider reaching out to a local property management company. A property manager can provide street-level insights that will help you determine the potential performance and appeal of a rental property in a particular neighborhood. Ask about demand in different areas, or if there are any neighborhoods where are things being leased before they hit the market. You can also search for nearby desirable amenities that appeal to renters.
- Things to know about buying in a Homeowner's Association (HOA): There can be advantages to owning in an HOA neighborhood if you're buying outside your local area. For example: There are rules and restrictions in place, as well as consistency within the neighborhood. On the downside, HOA fees cut into your yeilds. If you decide to purchase in an HOA neighborhood, ask about what amenities are covered and whether there are rent restrictions. At Roofstock, all of our properties are screened beforehand to ensure there are not located in rent-restricted HOAs.
Above: Roofstock CEO Gary Beasley chats about the Roofstock Neighborhood Ratings on the CNBC Nightly Business Report.
At Roofstock, we provide intuitive tools, research, data-driven insights, and a comprehensive analysis for every listing on our marketplace to help you find the right investment property for you.
"The major Pain point that roofstock is solving, that a lot of people can relate to, is 'How do I buy outside my local market?'"– Zach Evanish, Director of Client Advisory Services
Learn more about how our proprietary Neighborhood Rating helps you weigh the potential risks and benefits of owning in different neighborhoods: