How did you get to know your market?

[Gabriel Lamb]

Hello BP family! I am looking for advice on how you got to know the ins and outs of the market you invest in. I live in Avondale, AZ and am interested in studying markets like Avondale or Goodyear (a 15 min drive away from the growing areas surrounding our Cardinals stadium). I could even make a 45 min drive to Scottsdale or Mesa (more popular markets to invest in it seems). I am born and raised in AZ, so I know the bars, restaurants, and things to do in these areas. I feel i not really know the economics I would say. Like rents, job growth, population growth. Any help is appreciated. Thank you!

[Jim K.]

@Gabriel Lamb

This had better not be casting pearls before swine, Gabriel. I hope you're paying attention.

The first thing I looked for was an area that was sufficiently complicated to make it worth my while. And it took some time. Others from this area will confirm, Pittsburgh is full of working-class neighborhoods that change radically on a street-by-street basis. The area that I picked to invest in is one of the most extreme cases of this. This is where a local investor can find deals that out-of-area people can't. I was also looking for pocket neighborhoods where, for various reasons, D-areas became C-areas, because once again, this is where the local handyman investor should be to maximize his advantages.

1. Pick a mature urban or near-city suburban area that is complicated, where neighborhoods vary significantly street-by-street.

2. Look for borderlines, where the ghetto morphs into a comparatively nice street of houses, and figure out what anchors that area. It may be a hospital nearby. It may be a police station or school that keeps people in place. Sometimes, it's a church whose members refused to leave while the area deteriorated around them. It may just be simple lines on a district map -- this is where one school's influx area ends and another begins.

3. Go over the same areas again and again, at different times of the day. Remember, you're walking through C/D areas doing this -- it can get weird when you turn down the wrong street in the middle of the night.

4. Look for your target style of house and make note of the addresses. I've talked about this before on BP, but as a handyman investor looking for places I can maintain largely alone, I'm always on the lookout for brick-veneer post-WWII-built 2-bedroom/1bath SFR, side-by-side duplexes, or row houses with simple, low, easily-maintainable roofs. That's where I can maximize my advantages.

And there it is, a basic blueprint to the bucks for the broke investor looking for a low-cost way into the game, and you didn't even have to buy me a gyro, let alone a McRib. Good luck, Gabriel!