In 2009 I bought my first investment property. After conducting a lot of online research, I was convinced that Colorado real estate was THE right place for me to invest my money. I bought a high end condo and it doubled its value in 8 years. It was literally a hassle free investment – exactly what you think passive income is supposed to be. Good tenants who worked for the University and cared about the condo, an HOA who took care of the building … The big bonus came when Google Inc. built their new Boulder offices across the street from my condo. No explanation needed.
So you may be thinking, “way to go, congrats on the beginners luck”. On the surface, and frankly in my bank account, the Colorado investment appears as a very successful, transaction. But wait, not so fast. Because in retrospect, I did well but not amazing. I now know that if I had invested those same funds in property in a true growth area, such as Philadelphia, I could have done far better. High HOA costs, high taxes and holding costs … ate up a big chunk of my profit in Colorado. My net ROI and my net value appreciation would have been much more dramatic if I had invested in certain neighborhoods in Philadelphia. But not just by investing anywhere in Philly, of course – only if I had known how to navigate the city and find the right property at the right place and time. Back then, Philly presented incredible opportunities but the City was not even on my radar for investing because I was a novice and overlooked what was literally right under my nose.
Life and investing are always more complicated than the theories we learn about in books, seminars and podcasts. Philadelphia presents many challenges to investors (thankfully, because if it was too easy, it would be too crowded). While some areas and neighborhoods are booming beyond recognition, others have been left behind, overwhelmed by the poverty rate, bad public schools, crime and neglect. To make good investment decisions for myself and my clients I had to learn which neighborhoods were left behind and why. Which areas are about to flourish. What type of properties make wise investments in each neighborhood. How macro and micro developments effect this specific market. Where and how politics come into play. What are the local market regulations and how do they impact the bottom line. Where big players are investing. it goes on. It is a very complex puzzle with pieces that move and change shape continuously.
Neighborhoods experience gentrification block by block. Price changes and appreciation are affected by proximity to schools and universities, employment options, transportation, parking, parks . . . Tectonic shifts effect population migration. House ownership and rental preferences are dynamic due to the multitude of factors that impact decision making.
The “hard data” I relied on before moving to the area does not tell me the full story. It’s not by chance that I overlooked the best investment opportunities back when I started. Only when I began spending my days walking the city and its neighborhoods, block by block and sometimes house by house, did I fully understand the limitations of data. Now, with both data and local insights at my disposal, my ability to make smart investments is supercharged – my boots on the ground are powered by data.
Today, my remote investor clients, benefit from my synthesizing the data and the access to and knowledge of the field. I explore opportunities in real time and act as my clients’ boots on the ground to make educated decisions about their property investments. They get to go with me beyond Zillow, City-Data, Rentometer and whatever other tools they find online, to access the information that can make or break a deal. I get many glimpses into the deals acquired by remote investors who make their decisions without the full picture – buying based on price alone, from stock inventory of companies buying at sheriff sales… The difference is more than significant. The difference is often about profit versus loss.