What criteria do investors use for choosing where to purchase houses for rehab? Do you look at school rankings? MLS days on the market? I just bought a zip code map, and a MLS map and I’m working on my marketing campaign. Where is the best place to go?
It doesn’t matter where you choose to rehab as long as someone is willing to live in the house. School rankings are irrevelant because people go to bad schools to. I tend to stay in areas where houses sell for atleast $300k. Then if I can find a distressed property, I have enough room to renovate and make a healthy profit.
All a rehabber needs is a blighted property in a non-blighted area. If there are areas where distressed properties are more readily available, it may not be a great place to renovate one. Then there are some areas where finding a distressed property is just not going to happen any time soon. You just have to look all over in every price range and zip code and school district until you find one that is uncharacteristically bad.
I wont buy in the worst ghetto areas, but other than that I will buy about everywhere. There is a market for just about anything if the price is right.
Different markets are going to have different variables. Find out what your average priced house sells for in your market, and I would recommend staying within a 60% range of that. The average house in my market sells for $125K. I am open to a rehab from ARV of 75K-200K. Below that I am dealing with credit risk areas where most people need the note carried for them or will atleast have to go FHA and some gift program, which can be a hassle, and above that I am dealing with houses that will routinely stay on the market for 6 months to a year or even longer.
As Danny The Great said, I would find the blighted house in the non-blighted neighboorhood. Don’t buy or end up having the nicest, biggest house on the block. That spells trouble.
Now Danny’s $300K minimum probably works well in his market, but would be the top 5-10% of houses in my market, and would not be a good investment startegy in my area.
Find out what your average house sells for and work from there. You want to just fit right in with the average house.