Neighborhood Analysis for Home Buyers: The Top 6 Factors

By Hard Money Russ

Aerial view of a suburban neighborhood

Maybe you have been relocated to a new city for work or are starting a family and want to find the ideal community to raise your kids.

Whatever the reason, finding the right home starts with finding the right neighborhood.

Analyzing the correct macro trends will help you determine the correct fit for you and your family.

Below we discuss key factors you should take into account to ensure your family is happy and you are making a wise long term investment.

Look for Up and Coming Neighborhoods

Purchasing a home in an up and coming neighborhood will often times get you better bang for your buck.

While these neighborhoods have not yet reached their full potential, it's a good place to find a diamond in the rough.


To identify these up and coming areas, look for the following factors:

  1. Find an area where there is not a surplus of inventory and what does exist does not stay on the market for long periods of time.
  2. Historical architecture can add lot's of character and charm to a neighborhood.
  3. Declining crime rate.
  4. Easy access to public transportation.
  5. Close proximity to other nice neighborhoods.
  6. Look for large retailers that have recently moved into or are planning to move into a neighborhood such as Costco or Whole Foods. This is a sign that the area is on the uptick.
  7. Trendy restaurants are opening in the area.
  8. Boutique shops are opening up such as craft breweries, boutique clothing or organic markets.

Location, Location, Location

Identifying appealing neighborhoods should be the first thing you do when shopping for a new home.

You will want to look for neighborhoods with the following:

  • Close proximity to your workplace
  • If it's close to a main highway, there is sound buffering
  • Avoid neighborhoods near airports
  • Having access to great public schools, parks, recreation centers, restaurants, hospitals, stores and other services are usually a big value add for home owners

Google Maps can help you get familiar with an area but can only do so much.

We recommend driving around and making some weekend trips to become acquainted with a neighborhood.

There is nothing like real experience to understand if you will enjoy living there.

Analyze the Market

There are many online real estate portals to compare property prices such as Zillow, Trulia and RedFin .

These sites will give you a great feel for the range of properties and prices available in an area.

Good metrics to look out for are properties with a similar cost per square foot and the same number of bedrooms and bathrooms.

Keep in mind the price per square foot is typically higher on smaller homes versus larger homes. The same goes for newer homes versus existing homes.

These online portals are a great start to get a feel for the market of any neighborhood.

Look at Demographics

Analyze the demographics of the neighborhoods that fit your criteria.

For example, if you are looking to buy in a neighborhood for your family, are there more renters than owners?

If there are more renters you could have a higher turn over of your neighbors, in essence not giving you a community feel.

Likewise if considering purchasing a rental, be sure to look at the median income of the neighborhood.

It's important your tenants earn enough to make the rental payments.

NeighborHoodScout is a great website to find this data.

Look at Crime Stats

Protecting your family should be a top priority.

  • Are their neighborhood watch groups?
  • How high is the crime rate?
  • Are there private security companies?
  • Is there a sex offender living nearby?
  • Crime data can be found at CityProtect and you can review the national sex offender list at The National Sex Offender Public Website.

Ask around the neighborhood to see if there are neighborhood watch groups.

These groups are great for crime prevention and also give an indication of a close knit community.

Talk to the Neighbors

Visiting all these websites will only give you so much information.

Nothing beats boots on the ground and direct experience in terms of your sentiments towards a neighborhood.

Drive through the neighborhood at different times of the day to see who’s out and about.

Stop to talk with residents and see if they are the kind of people you would like to live around.

A community after all is a collection of people with similar values and you should feel right at home.

Related

Do you need short term financing for a real estate project?

Hi, I'm Russ and I'm determined to help real estate investors achieve their goals. The only question is, who will it be?