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October 19, 2012


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If I were a real estate investor my niche would be the same as yours. The type of properties you describe are attractive and with landscaping that isn't just bare dirt and weeds, they also tend to be in areas with a lower crime rate and are fairly close to schools, parks, shopping centers etc. They are also areas that first time homebuyers tend to seek out, and those new buyers have lots of pride of ownership. They are the areas that we sought out back in 1960 when we were renters and had just arrived in California, and they still look nice today. The two car garages also help to keep the street free from too many parked cars.

I believe that each real estate investor is different. If you are avoiding properties with 1-2 bedrooms, I prefer to have this kind of property rented out. I believe that it is easier to find tenants for these properties. There are a lot of young professionals, couples, or start-up families, who are looking for homes with 1 or 2 bedrooms. In comparison, properties with 3-4 bedrooms in suburbs are more recommended for families. If I were a parent of a growing family, I would rather apply for a home loan than use the money to pay for rent so I feel that it is more difficult to find tenants for them.

I also lean towards 2 or 3 bedroom units. I love 2 bedroom units even more. Its been easier to get tenants for 2 bedroom units than any other size in my case. Young professionals in my area prefer this size to a 1 bedroom. Having said that, my 4 bedroom unit has never been vacant. This is because it is in the cheaper end of a very expensive gated community. People who cant afford the expensive home in an elite area would rather rent a cheaper home there to live with the rich. Its also low returns but high quality tenants.

@Cherleen and Soso

Both of your comments are exactly what this post is about. A niche is unique to each investor and fits both them and the area they are in. My example was to show how I found one that works for me. It's great they you also have found things that work for you.

Thanks for this post Apex -- I have three rentals and the same niche and experience as you, and I was going to post that I think that's optimal for everyone, but the other comments made me realize that it's probably because of the area where I live -- where there is a shortage of housing and it's quite easy to rent a large 4-5 BR house to an extended family (but in other areas with more vacancies or a younger population, it would be easier to rent smaller units). I wonder how much the niche is optimized for the investor or for the location?


I suspect it's a good mix of both.

Even though this post received relatively few comments I think finding your niche is one of the more important concepts in real estate investing. The topic tends not to wow anyone but I believe most successful real estate investors have a niche.

It's actually a topic that is common in business in general. It's the idea of focusing on your core business. When a business tries to expand into diverse areas outside of its core competencies it often fails in those other areas. Real estate is not an exception.

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