Professional Market Analysis

[Mike B.]

How do professionals analyze different rental markets for investment? Is there a standard way to review a remote rental market to determine if the area has good potential for investment? 

We have a rental home in suburban Austin that has increased from $230,000 to over $500,000 in the last 4 years. This is great but we are now running into cashflow problems due to the high property taxes. The home can rent for $2300 a month while I expect to pay $13,000 in property tax for 2022. 

There is a small metro area 45 minutes north of Austin that has what I believe has better potential for generating cash flow, but I want to properly analyze the market before selling our Austin house and buying in this other city. The other market is Killeen, Temple, and Belton. 

Where can I learn how to do a professional analysis of a market like this? Is there a good book I can read? 

[Taylor Dasch]

Hey Mike! I should have went into this more when we spoke. Great question. Here is what I do: I'll use deal check to input the property that I am analyzing, type all of my numbers in there and get an estimate of cash flow and cash on cash return for this specific property. I'll do this every day on multiple properties. Then I will go to realtor.com and check the for rent section, find a similar property and see what it is listed for and how long it has been on the market ( you will have to take a screen shot and check to see if it is off the market next time you check), this will confirm if dealcheck is accurate or not. Also I can pull rental comps for any property you are interested in in this area from the MLS which will show what the property was leased for. Set your 1-3-5 year goals and work backwards in terms of where you need to be to live the life you want.

For this you need a Crystal Clear Criteria. Mine is that I want to make 300/door on a buy and hold and purchase two properties per year. For a flip, I would like to get a 30% return. This way once I see a deal I can determine if It will work with my criteria or not.  

It really just depends on your goals as far as what you want out of your investments. I like cash flow because It will allow me to live my life while I'm still young and not have to wait for a giant check in 10 years.