Have you ever been in a human wave where people stand up, cheer, and sit down while encouraging others to do the same? If you have, then you already know a something about buying rental property in the inner city. Now you just need to put your knowledge to work.
If you want a really, really profitable rental with appreciation potential, then you want to select a rental with the ability to create or take part in waves.
Human Wave and Buying Rental Property
Extracting from Farkas’ 2003 research on human waves, I’ve compiled the following tips to improve your chances of catching a wealth-building wave:
1. Don’t go it alone. Not even the most popular mascot can start a wave by themselves; they rely on a Jumbotron and support team.
To be successful, you’ll need to collaborate. All too often, we want others to join us but we don’t want to join them; and that’s a major reason inner city revitalization efforts fail.
Listen carefully: You must grow strong in your interdependence if you want to build inner city wealth. Lone Rangers aren’t effective; they burn out before their efforts bear fruit.
2. Don’t buy in an obscure location. You can’t start a wave from the nose bleed seats; you need to be seen. In real estate terms, don’t pick a rental smack dab in the middle of a struggling neighborhood and expect its property values to increase one day.
3. Don’t ignore current events. If someone is injured on the field, that’s not the time to start a human wave. Pay attention to your timing. I’ve seen out-of-town investors do the craziest things because they didn’t take time to find out what was going on in the community.
Check out online crime reports. Read up on the local cultural events and festivals. Try to understand what your future tenants will experience.
4. Work on the fringe. You stand a good chance to get others involved when you’re close to the action – on the fringe but not in the fray.
Your instincts should alert you when you move from an orderly neighborhood into a struggling one; when you cross the fringe.
The fringe is ripe with potential. There, you will have the ability to capture great cash flows AND have the potential to increase property values. To increase property values, you’ll need to make your block of the struggling neighborhood look like the more prosperous side. This is very doable, but it will require initiative and leadership.
5. Establish communications beforehand. Just like the video showed, having a mechanism for communication is essential. Your odds of getting strangers to work together dramatically increase when there’s some form of communication.
Your task is to find out if your target neighborhood has an association where neighbors and owners can connect. If law enforcement is involved, then you have a winner. If there are some community leaders that show common sense, then you really have a strong chance of buying into an emerging market.
6. Work with a Cluster. You’ll stand a chance to get a human wave going if a cluster of enthusiastic fans start it.
While shopping along the fringe, find a group of landlords/business owners that are working to improve things. Consider investments close to their properties. Help them make a larger visual impression. After all, it is much more profitable to increase momentum than to create it.
Benefit From Endowments
Inner cities are typically endowed with the benefit of being in close proximity to freeways, mass transit and business districts. It is an extremely savvy idea to exploit these endowments by working to improve the area or holding a property until conditions are more favorable (i.e., a new business comes to town, etc.).
To get the most out of your investment, pick properties with human wave potential.
If you’d like to learn more tips to improve your odds of catching a wealth-building wave, then read Building Wealth with Inner City Rentals. You’ll learn how to locate properties with the greatest potential; use the influence that landlords possess; and switch tactics to fast track neighborhood revitalization; plus many other inner city specific wealth building strategies.
Join us for our webinar, where you'll learn how to make long-term profits with short-term rentals this Tuesday the 23rd!