What kind of food do you like?

I know… you’re asking what the heck has that got to do with deciding what type of real estate you should buy?! Stick with me.  I promise there are similarities.

I’ll get to that in a minute, but for now let’s just say it’s all about the experience you crave.

For example, if you like the fast-food dining experience over the expensive steak house in town, that tells me what type of food you’re into and what type of service you expect when dining out.

It also tells me that you like to get to the meat pretty fast. Maybe you want to skip all the reading in this article and get to the video I created to go with this piece. That’s fine. Here’s the link:

What is the experience you seek?

That’s really the question you need to ask when buying investment properties.

The experience and whom you want to serve dictates the type of rental properties you will buy.  – Tweet  

Think about it this way… When you and a group of your friends are heading out to dinner, you have to determine first what experience you want to have.

For every person in your group there may be a different answer.

While Fred may want an exciting, artistic adventure with sushi that comes at top-shelf pricing, Ann may want a quiet, well-cooked steak-with-all-the-trimmings experience. Lisa may want a really good, juicy, hand-cooked burger at a cute little restaurant while Mike would be happy with McDonald’s, because that’s just the way he rolls.

My wife and I go out from time to time… not as often as we would like, but we are both very busy with our business and with raising our two boys. We still find time to go out with friends and go on date nights. But every night out will be a different dining experience, which is determined by how we feel at that time and what our goals for the evening might be.

You better believe that deciding what type of real estate you want to buy is very similar.

For example, if Blanca and I take the boys with us, we want a family dining experience. It’s likely going to be noisy and the restaurant knows to give the boys crayons and coloring pages. In the real estate world, those are called amenities and the entire experience that equates to family-friendly properties in areas where there are lots of family-friendly experiences. That’s the market I love to serve most.

You see, I love serving families. I know the amenities they need, like a laundry area and maybe even laundry soap dispenser so if they forget theirs, I have their back! Plus it’s an added income stream if the area offers coin-operated machines and a coin-operated laundry detergent dispenser.

Why I choose to serve families first, but you might not.

As I explain in my book, I choose to serve families because they are typically stable tenants who pay their rent on time and take care of the property. I did my research and found that at a certain income bracket, these families tend to stay in place. As a landlord that’s what I want.

As tenants, these families are looking for a nice place where they can raise their children, where the property is near grocery stores, parks and other places to take the kids. They want a landlord who keeps the property in great shape, but are willing to do some minor repairs themselves. (You won’t find that in the luxury tenant.)

If I wanted to serve the fast-food-first tenant, I’d go with C-class properties in lesser areas. I’m not into that. I don’t want to serve that tenant. I don’t understand the mindset, and I don’t like what I’ve seen these types of tenants do to properties.

That said, I know a number of investors who love that type of experience… that type of tenant and that type of property. These people earn lots of cashflow serving that tenant type. They look for indicators of C-class properties… or even D-class. They are okay with having Section 8 tenants, and they understand that these renters may not have vehicles. That means the properties need to be near a bus route.

If that is the type of experience you are looking for, search for properties in low-income areas. But expect crime rates to be higher than you’ll find in middle-income family zones.  – Tweet  

On the other hand, let’s say you’re looking to serve the luxury tenant… that high-end sushi dining experience in life. Or the best steak house you’ve ever experienced.

If that’s what you seek as an investor, get ready to visit the “guest’s table” often and do every little thing for the tenants. In the restaurant, that means the server (that’s you) will place the napkin in the guest’s lap, verbally explain the menu options and make sure every little need is served.

As the landlord to the luxury tenant, you will be serving every need. For example, if the garage door isn’t working, you will send a guy out to fix it… even if it’s to change out batteries in the remote. You can expect to get calls to change batteries in the fire alarms, too. Or to unclog a toilet that the tenant could have used a plunger to do himself. Luxury tenants expect you to handle everything. But then they pay top dollar to rent your property. They are well within their rights to expect top-shelf service.

See? Now you understand why it’s not the type of property but rather the type of experience you are looking for that matters. Just like when you choose a restaurant.

I hope this helps you in your search for your next piece of investment property!

Now it’s time for my question of the day:

whattypewords

What type of resident do YOU want to serve and why?

Leave your answers under my video on my YouTube channel. Or get your conversation started in my Facebook Fan page. I want to hear from you!

If you haven’t grabbed my book yet, it’s time. Here’s the link:

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