Choosing a location for first investment property

[Mark DiRocco]

Hi All,

I've found my way to this site from multiple channels, let's see what it's about! My wife and I are looking to start investing in real estate and have been researching for a while now. To avoid the analysis paralysis I suppose it's time to reach out for advice. We're looking for rental properties out of state and hoping for advice on how successful investors chose which town or city to focus on. 

Ideally, we're looking to get into a property that is at or less than $250k with minimum 10% down. The market in SoCal where we live doesn't have much room for that sort of deal, hence the desire to look out of state. 

How do you go about choosing what city or location to target in order to start developing a network of professionals to get the process started? We are anxious for a location and patient for researching and finding deals, an ungainly combination. We want to have more focus on looking for deals in an area where we can get our feet wet and have some success.

We have been eyeing Tampa since we've got connections there, and nearby Orlando seems to be a hit seat right now.

Thanks in advance for your help!

Mark

[Kevin Dean]

Hey @Mark DiRocco. 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. 

@Mark DiRocco