Learning your market?

[Pedro Oliva]

As I'm starting out and doing alot of reading, I keep coming across many that mention to learn your market. This may sound dumb but, what exactly does this mean? Im a total newbie when it comes to rei and have the slightest idea as to what to look for, let alone how to look for it. I guess im in the situation of not knowing what I dont know. What is it that one needs to know about the local market and what are some steps to go about doing this?

[Jesse Waters]

Learning your market isn't as daunting as it seems.  Start by driving around, walking different neighborhoods, talking to people and doing some internet research.  Find out where the good & bad parts of town are, do you want to do college rentals, what to they cost to get into, what do they rent for.  Every market seems to have a sweet spot.  In my market single family homes that sell for right around $100k rent for $900-950, that seems to be the best ratio between cost & return.  We have some places that sell for $50k with rents around $750, but that $50k house was a $50k house 20 years ago, and will still be in 20 more.

You want to see what different locations are renting for, try rentometer.com, craigslist, realtor.com & walk into a local rental office, they should have a bunch of posting for local rentals.  Then, figure out what those properties would sell for.  Now you can establish your sweet spot.  See if you can find a local property manager, invite them out for a cup of coffee & get their opinion on different parts of your local market.  When I was starting out one of the local managers gave me about an hour of his time, told me which neighborhoods were higher rent, more turn over, less turn over and where his company refuses to do business.

Pardon me if I rambled some.  Hope this helps.

Best of luck.

Jesse