How narrow to specialize for efficiency and success?

[kornel]

Good day everyone.
There seems to be consensus amongst professional real estate investors that one should specialize in specific neighborhood(s) and a specific type of property within those neighborhoods. However when trying to apply this advice, I have found that there are not enough properties in my area and that if I followed this advice exactly, it could be a VERY long time before finding a property where the numbers work. For instance, as someone just beginning to invest, I`ve decided to invest in a duplex within Waterloo (non-student rental). When looking at a neighborhood that fits the fundamentals, there may only be 1 duplex for sale out of a total of only a few duplexes in that neighborhood. It may be months or years before another duplex in that area gets put up for sale, and even then it might not fit the property analyzer criteria. Therefore, would a more realistic workflow be to find a potential property for sale that is of the type the investor is looking for, and then heavily research the neighborhood to ensure it fits the criteria? Then if the numbers work on the property and the neighborhood passes the inspection an offer is put in. With enough offers put in, the investor would know a good amount about many neighborhoods within the city but wouldn`t be a specialist in just a few particular neighborhoods.

Do you think this would work? or am I just misunderstanding the advice of the experts.

Many Thanks.

Kornel Szrejber
[email protected]

 

[DaveRhydderch]

You choose one area to save time. When you specialize in one area, you know right away if a property has potential or not. You know what streets are good, which one to avoid, where schools are, etc. It would take a long time to do that over many areas.

Your problem just sounds like your are is too specific and possibly not the right area. Some areas will simply never cash flow. Widen your search so that you find an area that has at least a few potentials and learn everything you can about that area. Then when any new homes come on, you can either view them or toss them aside knowing they don`t fit the requirements.

 

[Thomas Beyer]

QUOTE (kornel @ May 5 2010, 03:26 PM) Good day everyone.
There seems to be consensus amongst professional real estate investors that one should specialize in specific neighborhood(s) and a specific type of property within those neighborhoods. However when trying to apply this advice, I have found that there are not enough properties in my area and that if I followed this advice exactly, it could be a VERY long time before finding a property where the numbers work. ..

how much cash do you have ? Enough for 15 houses ? Then yes, broaden your area somewhat or have a narrow area with a wider choice of house types !

If cash lasts for 1 to 3 only .. have an EXTREMELY NARROW area and house type and allow up to 2 years (yes, TWO !!) to deploy the cash !

Many novice investors I meet are way to eager to get going ASAP .. and thus will likely overpay or do not do enough research.

TD predicts house prices to drop .. WHY THE RUSH ???

If you haven`t written 10 offers and heard at least nine "no`s" or rejections you haven`t written enough offers or are way to eager or way too broad (or have way too much money perhaps)

 

[housingrental]

The advice above is good
I purchased a place apx. 4 years ago, didn`t find another of interest until 2 years later, and didn`t find another of interest until this Winter.

Another issue you likely have is what your looking for - A non student duplex in Waterloo. There is very limited supply, they sell at a low cap rate so hard to make $$ operating them, and the few that have decent potential for positive cash flow are often older properties with extensive deferred maintenance.

 

[kornel]

Thank you very much for your help gentlemen. Your advice really helps. I only have enough money now for 2 so I will take the advice and first find an area in KWC that has a big enough supply of the target property type I`m looking for that can potentially cash flow, and then specialize extensively in that area.

Many thanks for preventing me from making a rookie mistake by letting the eagerness/lack of patience get the best of me.

Sincerely,
Kornel Szrejber
[email protected]