What data should I look at before buying in a market?

Question

Hi all,

I am interested in getting into real estate investing. I am currently in my early 20's, have a well paying W2, and would like to begin investing immediately. I am interested in and focused on mid-term rentals and am looking to invest in other markets outside of my current location mainly due to high purchase prices. I have begun reading David Greene's Long-Term Real Estate Investing to ensure I do this properly.

What types of data should I be looking at before choosing a market for mid-term rentals? Should I focus on attracting one target audience or multiple target audiences?

Any and all advice is very much appreciated!

Stephanie Walker · Answer

There are a few ways to approach this. Do you currently own your own home? If not, I'd start there!

- Buy something that you can add value to, refinance in a year or two (or when it makes sense), take the cash out and buy an investment property
- Buy new construction, let the builders build the equity for you while you live there, sell in two years (or LTR - MTR typically isn't allowed in new construction neighborhoods)

If you are thinking of self-managing, what about Winston Salem/Greensboro area? It's still drivable from Raleigh area and much more affordable. I manage a few MTRs in that area and they perform well. Or what about areas outside of Raleigh? I have an MTR I manage in Benson and that one performs well too.

Samuel Diouf · Answer

Ohio high has some great demand for MTRs with so many professionals traveling here for work.

Nicholas L. · Answer

@Connor Golden

start with a house hack.  period.

and if you're also interested in MTRs, on top of house hacking, great.  I would still look in your metro market, maybe you have to go an hour or two out for the price to go down a little.  but there is just no substitute to being in person and hands on.

David's book is great, but it's still hard to get started out of state.  once everything is set up, it can be 'easy.'  i have a property out of state that i self manage, that is easy as pie.  because... i used to live in it.  so i know everything about it and its location.

hope this helps.

Benjamin Carver · Answer

Have you looked into student and or medical housing in Durham??? There are some decent spots that do well and are more affordable than Raleigh.

Also I bought during the winter during slow season, great neighborhood but horrible photos, clutter everywhere, original condition. Got it at a great price and did a sweat equity cosmetic rehab. Currently house hacking it myself with airbnb and the numbers are great. There are definitely options here.

Nina V. · Answer

I start here

https://www.huduser.gov/portal/ushmc/chma_archive.html

Find your city and state and get a quick picture of how the city/metro is doing (population, demand and current approved permits for new construction. Rental facts.) One down side is that these reports are not available for each city or released annually. But it does give you a quick reference before you start an in dept analysis.

Nathan Gesner · Answer

David's book is a great start.

I think it's important to narrow in on a market, then look for a solid Property Manager. If you can't find a good PM, then you shouldn't invest in that area. A good PM can turn a mediocre investment into a solid return; a bad PM can ruin a good investment.

A good PM can also help you narrow in on the best neighborhoods, cross-check what your REALTOR tells you, and line you up with solid contractors.

I'm biased, but I don't think there's a more important person to have on your team.

Alecia Loveless · Answer

@Connor Golden While I’m not really finding any 1% rule deals currently on single family homes in my market in New England I’m still finding them on small multis. Many of them are easy value add deals where the rent is under market value and there is a cosmetic rehab needed.

Of course when I buy these types of deals I personally give existing tenants the chance to stay at a higher rent amount initially rather than just evicting and having to do a renovation before I start making any money. I don’t always raise the rent fully to market value in an attempt to try to keep the tenants.

If the tenants are staying usually the only initial repairs/renovations we do while they’re still in the unit is to upgrade the smokes/CO detectors to hard wired and anything else that turned up as a life-safety issue in the inspection.

But you definitely can still find 1% deals in some markets.

Joseph Bui · Answer

Cash flow can be found in the right markets. In the midwest markets I shop, cash flowing deals can be found with 1% rule or better.

John Mason · Answer

First of all  looking at the cashflow nowadays is not going to cut it, maybe look at value add and appreciation until the rates come down

Jimmy Lieu · Answer

Before choosing a market for mid-term rentals, there are several key data points you should consider. Start by examining population growth, as cities or neighborhoods with steady increases in residents indicate a thriving area with potential renters. Also research rental demand, particularly from traveling professionals, students, and medical staff. Compare average rental rates to ensure the potential income will cover expenses and provide a good return on investment. Totally can relate with you being from an expensive real estate market - I moved to Columbus a few years ago (from Portland, Oregon which was super expensive) to become a full time real estate investor, and ever since, I've completed quite a lot of BRRRRs, flips, and own a successful rental portfolio here in Columbus Ohio. Columbus has been experiencing growth due to its strong job market and universities. Assess economic indicators, focusing on job growth and major employers. Columbus’ proximity to Ohio State University and major hospitals like OhioHealth can be lucrative for mid-term rentals.

As an investor and agent here in Columbus Ohio, if you have any questions or want to connect, definitely reach out!

What data should I look at before buying in a market?

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