Analyze The Neighborhood Before Investing In A Home

During my long career of buying and selling homes I've learned to take the pulse of the market as far in advance of changes as possible

. That means I don't just pay attention to what's going on in the current marketplace, or what "experts" are saying about homes for sale in the coming year, I actually look at statistics from the county recorder's office in Oklahoma County where I live. I do some of my own calculations regarding home ownership, meaning whether owners are living in their own homes, which is called "owner occupied," or whether landlords are renting out homes, which is called "non-owner occupied." You might not pay much attention to that particular statistic when you're simply purchasing a home to for your own residence, but if you are looking at homes for sale with any intention of buying investment property, well, that's another matter entirely. It changes your viewpoint and that's when it becomes important to know the ownership statistics.

Let me explain - a neighborhood that shows more non-owner occupied homes than owner occupied homes is a neighborhood that is in transition. Generally you find that real estate investors who often pay cash for homes (as I do) have paid less than the typical market value for the home when they purchased it. One investor might have a plan to keep the home as a rental, while another might intend to do some work to the place and find some potential buyers that need to purchase the home on a lease with option to buy. You can be relatively certain that the homes for sale in this neighborhood in transition will be priced lower than they would be if more of the homes were owner occupied.

However, eventually there will be a cycle following this phase of more non-owner occupancy as tenants become buyers and then the homes are owner occupied once again. This cycle is not guaranteed of course, but it can be assumed. One other option if the homes are aging is that a commercial buyer will come into the area and buy up a whole block, tear down the homes and build a commercial building. Whoever owns the home when the commercial buyer comes along can make a very healthy profit. That has been shown time after time when buying homes.

So, now when you drive into a neighborhood looking at homes for sale and you find yourself wondering about the composition of the neighborhood as regards owner occupied and non-owner occupied homes, you'll know that you can find more information on the subject at the county recorder's office. It takes some time to research the property records yourself and analyze a neighborhood before investing, but it can be a very rewarding research practice for your future.

by: Leo Kingston

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