What does the term market actually mean?

Question

Okay folks, I am new and still trying to learn as much as i can before jumping into Wholesaling. I constantly read about determining your market. I hate to sound stupid but, what exactly does this mean?

Jim K. · Answer

@Jeffrey Scott Helms

You don't sound stupid at all. A market is a place where things or services are bought and sold, right? So YOUR market is the geographical area where you intend to do business, your target area, and all the properties that are being bought and sold in it.

Investors can choose to invest locally or long-distance. I, for instance, am very much a local investor, which is the traditional way of mom and pop DIY landlording, which is the kind of real estate investing that I have chosen to do. My market is currently a small patch of Pittsburgh and an area immediately south of the city proper. I know that area very well. I've read multiple books about it. I know its quirks and its pretty pockets. It's possibly the weirdest section of this town -- it's certainly the most well-known outside this region. I chose it deliberately because being local to it gives me the greatest possible advantage there -- I know lots and lots of stuff about the area that you can't pick up from reading a spreadsheet or a map from a thousand miles away. I know its sub-neighborhoods. I've driven through them and walked them and kept notes on them.

It took me time to choose this area to invest in. At the time I barely understood, like you, how I could best maximize my advantages by working in that specific area. But once I picked it, I started researching it thoroughly. I know its traffic patterns. I know the local government. I know the ordinances. If a house or series of houses gets demoed in the area I know what's scheduled to replace it. I keep track of every house in it that goes up on the listing services in my market and how much it ultimately sells for.

These are the things you can do in a specific market as a local investor to leverage the unfair advantages of actually being there. There are other things that long-distance investors do for their chosen markets that work for them.

Matt Berklacy · Answer

nice, I ask questions like these all the time too..most people are cool, unless they dont know the answer, then they get testy......lol...

I think of this as a numbers question...know your local area in numbers....retail Arv price; #, avg price per sqr footage #, cost of repairs #, days on market, zipcode desirables, radius of 10 miles? versus  40 miles versus next state over, etc, etc...you can offer, analyze deal, buy and sell better knowing your numbers of niche areas, zipcodes (,ie, market)

Jeffrey Scott Helms · Answer

@Jim K

Thank you for helping out and i am about to go into information overload it seems. Every comment i get is greatly appreciated. I definitely will choose to invest locally for quite sometime until i get more confidant in what I am trying to accomplish. I know this will payoff in the future and i am excited to get started. I do intend to try to find a mentor in my area to help out and i think this will be worth while in the beginning to develop the skills i will need in the future.