Before we leave our overview and go into details of our first strategy,
take a moment and evaluate your own marketplace. Here are some
characteristics you could investigate about your marketplace and the
neighborhoods in which you will look for property:
■ Establish the territorial area in which you will prospect for
■ Determine territorial divisions of neighborhoods in which you
will do business.
■ In each neighborhood determine if the number of home sales
as well as the value of their prices are rising or falling, and look
at trends for the past several years.
■ Look at the number of single-family houses in contrast to the
number of multifamily dwelling units, and find whether the
trend for the past several years is increasing or decreasing.
■ For single-family houses, determine the ratio of tenants to
owner-occupants, and the trend there for several years.
■ Determine the profile of the typical buyer in each of the respective
Don’t let this list intimidate you. Investigating these characteristics
isn’t meant to be a demanding task. You probably already
know much of the information. Whatever you don’t know can be
learned from local real estate agents, property appraisers, assessors,
or other investors. A check at the county registry of deeds office
may also be helpful. The purpose is for you to start gaining a sense
of what’s happening in real estate in your marketplace. This will
start you thinking about whether the value of single-family properties
is going up and whether the tenant mixture is moving toward
owner-occupants—two important points in using the real
estate techniques in this book.