Eight Factors to Consider When Performing Due Diligence on Areas to Invest In

Finally, to avoid buying an option on a property in a bad location, you need to take the time to thoroughly check out the area surrounding the property under consideration. This means understanding the political, social, and economic factors that influence property values within the area. You must consider the following eight factors when performing due diligence to select the most stable and potentially profitable areas to invest in:

1. Age and condition of properties within the area: Avoid areas where virtually every property is old and in a run-down, neglected physical condition. This is a telltale sign that there are hard to overcome problems affecting the area, including crime, drainage, local perception, and lack of municipal services.

2. Storm water drainage within the area: Avoid areas with inadequate storm water drainage systems that are susceptible to chronic flooding whenever a hard rain occurs.

3. Perception of the area within the community: Avoid areas that are perceived within the overall community as being the local equivalent to the South Bronx in New York City. Areas having this type of an overly negative perception are next to impossible for private individuals to overcome and are best left to the swell folks at HUD to waste our tax dollars on!

4. Enforcement of building and zoning codes within the area: Avoid areas where building, health, safety, and fire codes and zoning regulations are not being enforced. A lack of code and zoning enforcement is a telltale sign that an area is in rapid decline.

5. Crime rate within the area: Avoid areas with a high crime rate or the reputation for being crime ridden. When an area has a high crime rate, established businesses try to move out while new businesses are scared away from locating in the area.

6. Presence of public nuisances within the area: Avoid areas that are near stinky-smelling sewer treatment plants, meat-packing plants, or paper mills unless the properties within the area have potential for use as unattended warehouses or bulk storage facilities.

7. Availability of municipal services within the area: Avoid areas where hookups to municipal water and sewer lines are not readily available and relatively expensive.

8. Traffic patterns within the area: Avoid areas that do not have relatively easy access to main thoroughfares.

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