The #1 secret to win the real estate game is to buy right. Buying right means to buy in the right area and to use the right buying method.
In this article, I will show you the step-by-step process to segment your target market area.
Mapping Your Real Estate Investment Area Step-by-Step
The most crucial first step to real estate investing is to determine which area you would be comfortable investing your time and money into. Commonly, beginner investors start buying investment properties close to home, close to work, and/or the areas in between home and work.
But successful investors do more than just buying houses in their own backyard.
This is the step-by-step process of finding the price range in a certain area. I'm giving an example of how to find the price range for single family homes. If you are interested in other type of properties such as duplexes, triplexes, etc. You can use the same process but mortify the questions to fit your investment needs.
- Choose an area that you are interested in
- Ask a realtor for the average price of 3 beds/2 baths home
- Take the average price (step 2) and multiply by 70% and by 110%
- Ask a realtor for a "MLS short form" for single family homes with prices ranging from $0 to 120% of the average price (step 2)
- Organize your MLS listing (step 4) into different price range
- Below 70% would be considered as low income area
- Homes around the average price would be the working class area
- At 110% would be the middle income area
- Above 110% would be the upper class area
- Determine which method of investing you would like to do
- Match the investment strategy(ies) with the income area - for example, for wholesale, match with the low income areas
- Get an enlarged size map of the area you are interested in - a map where you can easily see the streets
- Learn the area by driving through it and asking people who live there about that particular area
- Once you have a clear understanding of the area and find your ideal neighborhood(s), go back to your realtor and learn about the market condition of that area by looking at the comparable market analysis (CMA)