Thinking about investing in U.S. real estate? You should know that there are many properties in poor neighborhoods in the U.S. that can look luxurious: broad villas with multiple levels, a garden, a garage, and more. To the outsider, they can seem like expensive homes in high-class neighborhoods, while in fact, they are not. There are millions of homes in the U.S. that are not worth even $10,000. In Detroit, there are houses sold for only one dollar!
Why is it important to know the purchasing power of local residents and how much they earn? That way we can know if the rent we are charging is justified for the area and if the tenants are making enough to pay it. Furthermore, the lower the purchasing power and income of the residents, the higher the crime rate, the higher the chance of tenants defaulting on the rent, and necessarily, the higher the unemployment in the area will be as well.
Real estate in the U.S. is a very transparent business, and all the data are available online. It is important to mention that there are many websites where this information is available, and sometimes there could be a slight difference from the original, but it is easy to find out what the local level of income is.
Once you have a property you are interested in, you need to input the address to a website, such as zillow.com (this is just one of tens of such sites; it’s important to check several). After you have seen the property and read up about it a little, you can see other similar properties for sale, ones that have been sold, as well as the history of the property you’re looking at.
In order to find out what the local level of income is, click on “LOCAL INFO,” which will give you information on the area – who the residents are, how many are single and how many are married, their ages, etc. To find salaries, click on “DEMOGRAPHICS,” and you will get a view of local salaries in comparison to state, national, etc. It is critical to cross-reference this information with that of other sites, as well as with the broker, who knows and lives the area.
Once you know what the residents in the neighborhood earn, you can easily predict whether you will have problems with rent. For example, in an area where the average salary is $2000 per month, it will probably be difficult for someone to pay $1000 per month in rent.
Build your new life in the US!