How to think about entering a new neighborhood right now

|

Because the market is hot and interesting deals are fewer and farther between, we’ve been poking around in some new neighborhoods.

Is this crazy? After all, isn’t a hot market exactly the wrong time to go outside your circle of competence?

Under some circumstances, it’s not. If you can find a deal with good numbers and minimal construction risk, then branching into a new neighborhood where you’re not as certain of the rents can be a reasonable thing to do.

The problem comes either the numbers are slim or the construction budget can’t be nailed down with the usual degree of certainty.

Adding “new neighborhood” to either or both of the above risk-factors is, really, crazy. There’s just too much that can go wrong.

Share