So, you’ve began the process of learning how to invest in real estate, obviously, since your watching this video. You’ve been looking around on realtor.ca or realtor.com. seeing whats available in this market, that market. But you’re still wondering where to invest in real estate? There are just so many properties available and so many cities or towns to invest in.
Don’t worry, because if you watch until this end of this video, I’ll share with you the main factor that you need to consider when deciding on where you should invest in real estate.
First, determine the market you will be investing in. Now, if you’re just starting out, I highly recommend you stay away from all the hype about big, expensive, unaffordable markets, where investors invest on speculation, meaning investing for the increase in prices. As well, stay away from international markets, or even all those markets you keep hearing about on the news, or in the papers, or those e-newsletters you get.
Stick to the golden rule, which is to...
Invest in a market and an area you’re familiar with, which, most likely is, the market you live in, your own backyard. That is exactly what I did, and I’ve built a 50+ unit portfolio in just 4 years and my business now runs on autopilot.
Enough about me though, because once you’ve decided on that, on the market you’ll be investing in, you need to figure out where to invest in that market.
In my market of Windsor, ON, there about 10 different areas, and within those areas, there are a bunch of neighborhoods, and within those neighborhoods are a ton of streets with a ton of properties. Yes, this is how narrow of a focus you need to go when figuring out where to invest in real estate.
In fact, the map I'm holding in the video can help paint a more clearer picture of what I’m talking about. As you will see, even just a small market like Windsor, ON is, with only about $200K people, $300K, if you count the surrounding areas, is actually quite big, with probably 50 different neighborhoods in the 10 areas, tons of streets, all within each neighborhood, and all of this, just in the city of Windsor, not a huge city, which, as your probably thinking, OK then, how do I narrow it down then on where I should invest?
Here it is!
Stick to areas that are safe.
It’s as simple as that.
But how do you know which areas are safe?
Well you could jump on the internet and look up a ton of statistics. But that’s confusing, instead, use your own knowledge. This is why I said to invest in a market, a city or town, that you’re familiar with, because you already know which area’s are safe.
And if you’re still unsure, maybe because a property hit the market that is a steal, and your thinking you should buy it because it’s so cheap, but you don’t know the area that well, ask yourself this one question, would you walk around that area at night?
I say that because one of the properties I purchased in the past met this exact criteria, cheap, a steal, but I didn’t know the area that well, and I didn’t feel safe walking around it at night, in fact, I never went to the property at night, and that property actually became a nightmare for me, but that’s a whole other story. In the end, I ended up selling it at a loss.
So, if you don’t feel safe walking around a potential property you are thinking of buying at night, then trust me, don’t invest there. And if you’re still not sure, ask yourself, would you live there, or would you and your family live there. Is it family friendly? If not, and you’ve never owned real estate, then I suggest investing in another property in another area.
But you’re still probably wondering, why a safe area?
Well because safe areas are where people want to live. And the more people that want to live in a nice area, because who doesn’t, the faster and more property values will appreciate, because there is more demand. Simple economics.
As well, the safe areas are going to attract better tenants. As I said, if you and you’re family would live there, most likely other people and families are thinking the same thing.
I mean, who doesn’t want a nice place to call home after a hard day of work. A place where they don’t have to worry about there kids. This is why you want to invest in a safe area.
As well, when you invest in a safe area, where you are attracting good people whom want to rent, whom are working, trust me, you are going to have more freedom.
And by freedom I’m talking about not having to deal with issues at the property, issues with the tenant, issues with the neighbor as a result of the tenant, issues with the city as a result of the tenant, or even the police.
Which takes me back to my property I talked about earlier, which I bought because it was a good deal, and I thought that because I projected I’d make a ton of money, that is, a high cash on cash return, which, if you want to learn how to calculate a properties cash on cash return, I highly recommend you watch one of my other videos where I show you how to calculate a properties cash on cash return, and you can do that by clicking on the link right here.
But unfortunately, because the area wasn’t that good, wasn’t that safe, I had to charge lower rents to fill my units, which as a result attracted the wrong people, which resulted in a ton of headaches, vacancies, non paying tenants, you name it, I dealt with it.
So, I’ve learned, just invest in safe areas when figuring out where to invest in real estate, no matter how good of a deal you think the property is, or how much cash on cash return it will generate.
And once you find a good property to invest in, in a good area, then take the next step and make an offer.
But first, I highly recommend you continue learning more about what else is involved when you invest in real estate before you make an offer. In fact, I’ve created a real estate investing bootcamp, that will teach you the foundation you need to begin investing in real estate.
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