Here we go again.
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Don’t you just love it when someone asks your opinion of something that you actually happen to know a LOT about, you give them the answer, then they proceed to argue with you?
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It happened to me again last week.
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And unfortunately it was one of those I-already-made-the-decision-so-I’m-only-asking-you-because-I-want-to-validate-in-my-own-mind-that-I-was-right kind of questions.
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I’ll spare you the details, but the person bought a trashed out house in a marginal area that he’s planning to fix-up and rent. He bought it because he couldn’t believe that the house was THAT cheap.
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I didn’t have the heart to tell him that it was because nobody else wanted it – because it was in a bad location.
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So I thought that I would take the opportunity to discuss what I consider CRITICAL SUCCESS FACTOR #1 in being successful in owning rental real estate.
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And that’s LOCATION.
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You can’t fix it.
You can’t change it.
And you can’t convince anyone else to like it.
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So don’t buy in those areas.
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Here’s an anecdotal research technique that I used a while back to determine the good/bad line for location.
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I have taken almost a couple of hundred applications for my rental homes, and what I have done is driven by the homes and apartment buildings that these applicants were moving from.
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I looked at their dwellings, I looked at the areas, and I even made appointments to see some rental homes and apartments in those areas.
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Why?
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Because I COMPLETELY understood what my tenants were moving AWAY from.
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Once I understood that, then the location decision was a no-brainer.
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This works because it’s simply a variation of the strategy of finding out what your customers want and giving it to them.