Once you’ve made the commitment to become a real estate investor, what’s the first thing you should do? Is it to run out and have 5,000 business cards printed… or order 500 bandit signs… or create the world’s slickest looking website? No. These will come later. There’s something much more important you must do first.

So what is it? You have to decide the area where you’re going to invest. If you choose the wrong area then the best business cards in the world, or the best marketing won’t matter because you’re not going to get any deals.

For example, what if you choose a rural area in the middle of “nowhere Iowa” without any houses. How are you going to get any deals there? Or what if you choose an area in a city that has all apartment buildings and almost no single family houses? Or what if you choose an area with million dollar houses when your goal is to lease option houses to the average American who makes less then $50,000 a year?

Obviously you can see that any of the above choices would cause your business to collapse very quickly.

So then how do you choose an area to invest which will give you the highest chance of success? Well… you want bread and butter neighborhoods with 3 bedroom, 2 bathroom houses. You want these neighborhoods to be slightly below the price of the average in your area.

I happen to live in the Washington, DC area. Houses in my area range from about $600,000 to $1 million. I never try to do deals in my area because the average American cannot afford these prices. A little further out, you can find quality neighborhoods with prices of about $300,000.

But I still like to go slightly below that and do deals in neighborhoods between $225,000 and $275,000. This range is my bread and butter because the lower the price of the houses, the more people who will be able to afford them.

However, you have to be careful to not go so low that you end up in a “war zone” or dangerous area.

Make sure your bread and butter neighborhoods are safe so that families will want to live in them.

So what if you’re still a little confused about what area you should pick in your particular city? Here’s the secret: Go to your local REIA meeting and find out where the most successful investors are working. If you hear over and over that the best place to invest is zip code 22406, then that should be a clue that you might want to do some marketing there.

Whatever you do, before you go any further in your business, make sure you have chosen a good investment location which will give you a chance to do plenty of deals and make a lot of money.

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