What is a "Farm?"

Real estate professionals use the term "farm" or "farm area" to describe the geographic or other demographic focus of their investment activities. Typically, a real estate entrepreneur is looking for a focus area with which they are familiar, which is convenient, and which has a high level of activity (meaning sales transactions).

Typically, the focus area will include at least 200 but no more than 1000 properties. This farm area will be where marketing efforts are concentrated, and these marketing efforts may take a multi-media approach in order to be effective. This may include door-knocking, direct mail, signage, and media campaigns targeted to that farm.

Let's look for example at the 98115 zip code in Seattle. How can we define a neighborhood that is a subset of this active zip code where an investor might focus their attention?

The NWMLS allows us to research specific neighborhoods within any zip code that have had the highest level of sales activity. We identify those neighborhoods, and draw a rough boundary to determine whether the identified farm has the right number of properties to target.

This zip code had 287 sales in the last six months. 267 of these were in the "710" area defined by the NWMLS. Each of the most active neighborhoods in this area had the following number of sales: Wedgwood - 69, Maple Leaf - 66, Ravenna - 47, Bryant - 30. Ravenna has 13 active listings on the NWMLS; Maple Leaf currently has 10 active listings; Wedgwood has 9 current listings.

The boundaries of Wedgwood are roughly as follows:

• bounded on the north by NE 95th Street
• bounded on the east by 45th Avenue NE
• bounded on the south by NE 75th Street
• bounded on the west by a route coming north from NE 75th Street along 25th Avenue NE, then jogging due west along NE 85th Street and snaking up Lake City Way NE to NE 95th Street

Ravenna is bounded on the west by 15th and 20th Avenues NE, beyond which lies the Roosevelt neighborhood; on the north by NE 75th and 85th Streets, beyond which lie Maple Leaf and Wedgwood; on the east by 35th and 25th Avenues NE, beyond which lie View Ridge, Windermere and Laurelhurst; and on the south by NE Ravenna Boulevard, and NE Blakeley or NE 45th Streets, beyond which lies the University District.

The Maple Leaf boundaries are, starting from the south and working clockwise, NE 75th Street west to Banner Way NE, north on Banner Way to Interstate 5, then north along the edge of I-5 up to NE 103rd. Then east along NE 103rd to 5th Avenue NE, north to Northgate Way, then east to Roosevelt Way NE. South along Roosevelt to Thornton Creek and then east along the creek bed to Lake City Way NE (roughly at NE 98th). Then south along Lake City Way NE to 75th Ave N.

Secondly, we may want to identify real estate brokers that dominate the market in this farm. They are either a resource or the competition, depending on our perspective as a real estate professional. There is no single agent that has more than one current listing in either Ravenna, Maple Leaf, or Wedgwood.

Debra J. Arends of Re/Max Northwest and Steve Laevastu of Windermere RE/Greenwood each had two sales in Wedgwood in the last six months. Steve Laevastu had four of the 47 sales in Ravenna in the last six months. He also had one sale in the Maple Leaf neighborhood during that time. Roger Turner of Windermere RE Co had 4 of the 66 sales in Maple Leaf in the past six months.

The next step would be to analyze the number of properties within each of these three prospective farms, and to determine the rate of turnover reflected in the sales figures to assess which would be the most appropriate neighborhood to use as a farm.

Happy Investing!