Ready to learn more about my PLTO system?

Excellent.

You’re in the right place.

In the first article, I shared about the “P” part of my system. That gave you the information you need to determine who you are as an investor, the type of tenant you want to serve and the type of property that matches those two criteria.

If you haven’t yet read the first article in this series, go back and do so now. Then come back here and read this one. It will be a lot shorter!!

In this second part in my 4-part series about how to get started in real estate investing, we’ll cover the “L” part of my personal PLTO system.

If you want to get to the education quickly, watch this video:

 

So, what’s the “L” about?

The “L” in my PLTO system stands for theLocation.”

Big surprise, right?

You’ve probably heard it a lot… “location, location, location.” In real estate, it really is all about location, but that location has to fit who you are as the investor.

Properties in which you invest have to fit your personality, the type of tenant you want to serve and the type of property you’re looking for. For me it’s Charlotte, North Carolina and other cashflowing markets.

I deal in “B” Class properties and hard-working, stable tenants. Families are what I like to rent my properties to, because I know they aren’t going to skip out and likely won’t destroy my units.  – Tweet  

I didn’t just randomly pick that part of the United States. I did a heck of a lot of research to figure out that’s the place I like for several reasons. I deal in “B” Class properties and hard-working, stable tenants. Families are what I like to rent my properties to, because I know they aren’t going to skip out and likely won’t destroy my units.

In the multifamily property space, understanding the type of tenant you want to serve is critical. That helps you decide where to buy your properties.

Let’s say that, like me, you want to serve blue collar workers with families in “B” Class properties in a nice area where people take pride in keeping property values up. (Thus Charlotte!!)

Suddenly you find a small apartment building in a bad part of ‘Anywhere, USA’, where crime rates are high. Oh, but you can get the property for very little down or maybe the price is so enticing that you take it.

Let’s say you buy that property.

What happens next?

If it doesn’t match who you are as an investor and the tenant you end up serving doesn’t match the tenant you say you want, and on top of that the property isn’t in the class you determined to be in alignment with your identity… you’re in for trouble.

First, you will have trouble with the type of tenant who is okay with or has to for financial or other reasons reside in lower-end “C” Class properties. I promise that your property won’t be take care of well by those tenants. While there are always exceptions to the rule, overall you will see a mindset that is not in alignment with yours. Unless you understand that mindset, you should stay away from that type of tenant.

Second, you will have higher ongoing maintenance and repair costs. Why? Refer to point #1. If your tenants lack the desire to keep their own units in good condition, do you think they’re going to care about keeping the property overall in good condition? If the crime rates are high, what do you think will happen to the light bulbs around your property? (HINT: They might get smashed to keep distasteful activities in the shadows.)

If your tenants lack the desire to keep their own units in good condition, do you think they’re going to care about keeping the property overall in good condition?  – Tweet  

Third, in properties that are located in less desirable neighborhoods, you will need to hire a security guard. You don’t have to, but you need extra security in place. Maybe it’s just a good security camera system and paying for an automated security-response company, but you’ll need more security than I will in my “B” Class properties. Again, it boils down to mindset.

So choose locations that are in alignment with who you are as an investor and whom you want to serve as tenants. Look at the markets, the crime rates, what’s going on in the areas you’re considering, whether anything will be built or is being built that will raise the value of your property. Narrow your locations down to a handful and then decide where to focus your energies.

Again, there are many reasons I chose to live in Barcelona and do my long-distance investing in Charlotte. I’ve written a lot about in my blog, so it’s no secret. That doesn’t mean Charlotte will work best for you. The location is something you get to decide. Charlotte is just one of a number of locations I looked at and researched!

Now that you understand the “L” in my PLTO system, it’s time to start researching locations. You should start with 10 and work your way down to the best three. Then narrow it more from there!! Let me know what you decide. I’d love to hear from you.

In my next article and video in this series, I’ll take you through the “T” in my system.

Before you move on to other things, answer this question:

Considering the various locations around the U.S. or even the globe, where do you think you’ll feel most comfortable as a real estate investor and why?

Share your thoughts about this topic with me on my Facebook Fan Page:

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You can also check out my latest podcasts and collaborations here keeponcashflow.com/podcasts/