Finding a market for first investment

[Nick Pisano]

Hi all-

I'm just getting started on the education phase of my push to get into real estate investing, as I figure out my plan going forward. I've got about 40k in cash to work with on my first deal (which I hope to be a BRRRR), but I live in Washington, DC, which puts most local properties a little out of my price range and comfort zone for a first deal. I've listened to the podcast on out of state investing, and am currently working my way through David Greene's book on it, but I've been having a little trouble finding a market.

From some basic research and checking out the forums, it seems a lot of people do well starting out in the south or midwest, but I don't have any particular connections there to use as a jumping off point. How would I go about evaluating a city or market, and are there any particular areas that anyone would recommend for a first deal? Thanks in advance!

[Kevin Dean]

Hey @Nick Pisano, I too am from the Washington, DC area and invest outside of the state. When looking for markets these are a few of the things I considered before jumping in.

1. Population Growth

2. Job Growth

3. Rent Growth

4. Tenant/Landlord Laws

5. Competition in the market

6. Do I have any connections and established relationships in this market?

For me, positive rent, job and population growth are non-negotiable's! You can find data on this at www.bls.gov

as well as at www.city-data.com .

With that said, I wasted a lot of time looking at markets where I had no connections and there was a ton of competition. Competition in these markets were a result of me following the heard to top markets with tons of rent growth, job growth and population growth. These markets are great for those with experience and connections, if you have neither, it may be tough to find your first deal.

After this realization, I decided to focus on markets with positive rent, job and population growth where I could either build upon already established relationship, or make relationships with a lack of competition as compared to some other markets. While the markets I have chosen may not have as much rent growth or cap rate compression as other top growth markets, I believe the lack of competition makes up for that.

Just as investing in the stock market, or bitcoin, or anything, you want to be ahead of the heard as best as possible. Once everyone starts screaming about how great a market is, you are probably too late (unless you have solid experience and relationships that can compensate for increased competition).

It may take some time, but think about what is most important to you (some of mine were the 6 I listed above). After you figure out those non-negotiables, you will start to notice trends and will narrow in on a market or two.