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Originally Posted by mustard76  What type of neighborhoods do you look in for deals? I have heard people say that "working class" neighborhoods are best compared to pricier neighborhoods. |
Here's what's true: property prices are very fuzzy things, and therefore malleable. You can almost always "stretch" your asking price in the direction of the median. If you buy a house slightly below median, you can ask for a slightly higher price and have a good chance of getting it. If you buy a house slightly above median, all you can ask for is a slightly lower price. For this reason, I've heard it recommended to look for the 80% of median-range neighborhoods. (For example, in Denver the median house price is $250K. The best option for me is to buy houses in neighborhoods where the prices are around $200K.)
Also, the just-below-median neighborhoods do well in all economies. If the economy is good, people from poor neighborhoods will want to move into your lower-middle-class neighborhood. If the economy is bad and people in the middle class are having to move out of their homes (which I understand is the current situation on the east coast) then they're moving into your lower-middle-class neighborhood. Whereas if you have a million-dollar house, you're really relying on someone wanting to buy a million-dollar house, which only happens in good economies.
That being said, if you find someone who will sell you a million-dollar house for $600,000, buy it. Or send their name and address to me, and I'll pay you $2,000 when I close on it.
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Can you recommend any more books for people just starting out? How did you get started?
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On building wealth in general The Richest Man in Babylon Rich Dad, Poor Dad, etc (see above link for other opinions on the series, but I still got value from it.)
Think and Grow Rich The Power of Focus On Real Estate Specifically Rich Dad's Guide to Real Estate Investing Also, see if you can find audio discs from Dolf de Roos -- he's a hoot to listen too. (Probably more so for us Americans, who think aluminium is a funny word.)
The ABCs of Real Estate Investing Also a Rich-Dad book, but more practical
How to Create Multiple Streams of Income Buying Houses in Nice Areas With Nothing Down A more off-beat approach, but definitly valid.
Are You DUMB Enough to be Rich? Also non-traditional, but clear and easy to do.
Those are the ones that come to mind. Most of them have recommended reading at the back, so that should be enough to jump-start your research.
Also, I should make it clear that while I am a fount of knowledge on what people say about real estate investing, and I am currently in the mentorship program from Results Now (
How to Create Multiple Streams of Income...) I have never actually completed, or even started, an investment real estate deal. So there's not actually any proof that I have a clue what I'm talking about.