Real Estate, Evaluating Neighborhoods.

The reputation of particular neighborhoods can be based on many factors. Certain key or essential elements, which we discuss in these sections, differentiate the neighborhoods with good reputations and positive trends from the areas that are stagnant or trending the wrong direction.

Schools

If you don’t have school-age children, you may not be concerned about the reputation and test scores of the local schools. But, whether you’re investing in residential or commercial income properties, schools matter. The demand for residential and commercial property (and the subsequent value of the property) is highly correlated to the quality of local schools. Ask any real estate agent about the impact of schools on the demand and sales price for a home in a great school district. Likewise, employers use the Quality of local schools in recruiting their key personnel — and sometimes even relocate company facilities to be near areas known for their schools. The Internet can be a very useful tool in determining the quality of local schools. Most school districts have websites that include information on the test scores of their students for mandatory state and federal testing. Unfortunately, many people make snap judgments about school quality without doing their homework. Visit the schools and don’t blindly rely on test scores. Talk to parents and teachers, and discover what goes on at the school.

Crime rates

Crime can have a significant and sobering effect on the demand and desirability of all types of income properties. No one wants to live in a high crime area, and commercial tenants and their customers neither work at nor patronize unsafe businesses. No areas are going to be crime-free, but you don’t want to find out after the close of escrow that you have purchased a rental property that is claimed by rival gangs. Before you make your investment decision, consult these sources:

Local law enforcement: Contact local law enforcement and obtain the latest and historical crime statistics.
Local newspapers: Newspapers (and their websites) often have a police blotter section that provides information on major and even petty crimes in the community.
Sexual-offender databases: Laws require certain convicted sexual offenders to register with local law enforcement. These databases allow you to identify the general locations of convicted sex offenders who have committed sexual offenses against minors and violent sexual offenses against anyone. These databases aren’t foolproof. A few states haven’t been consistent in their efforts to maintain and make them available. Also, persons required to register don’t always follow the requirements, but at least you can find out about the known ones. Even if not legally required in your area, be sure to advise your tenants to check the database; this information is dynamic, and everyone needs to make his own decision about the safety of his family.

Pride of ownership

Pride of ownership is an intangible attitude that has tangible results. Pride of ownership also has no economic boundaries — even modest-income areas can really look sharp. Look for rental properties in neighborhoods that reflect pride of ownership — well-kept and litter-free grounds, trimmed plants, beautiful flowers, fresh paint, and so on. This curb appeal helps you attract and retain your tenants.

Although everyone may have a different perception of exactly what constitutes a well-maintained property, pride of ownership is readily apparent, and the effort made by business owners and homeowners to keep their properties looking sharp is important to real estate values. You may find that some of the more aesthetically pleasing areas look that way for a reason. Homeowner’s associations and business parks typically have a board of directors and architectural review committees that routinely inspect the properties under their jurisdiction, as well as review and restrict improvements to meet certain standards. Other areas may have informal committees of neighbors who band together to keep their properties in tiptop condition. This tendency is also true of multifamily residential and commercial properties, and these properties usually must also submit to local laws and regulations enforced by the building or code enforcement departments.

You can control the appearance, condition, and maintenance of your own property, but your options are limited if the properties surrounding it fall into disrepair. Your purchase of a fixer-upper and the investment of time, money, and sweat equity won’t be rewarded financially if the surrounding properties are in a state of disrepair and have owners who don’t really care.