Studying “the market”

[Mandi Martinez]

Excuse my ignorance if this is considered a silly question: I know that a part of real estate investing is “knowing your market” but how can I BEST “study the market”? What am looking for? How many homes sold vs how many are for sale? What do the experienced investors take note of and keep tabs on continuously throughout the year to “know their market”?

[Anthony Dooley]

@Mandi Martinez Great question. In every city and town, home values and rent varies from neighborhood to neighborhood. If you know your market, you know how much a house is expected to sell for or rent for based on the area, down to the street sometimes. If you find a distressed property in a $200K area for $100K, that should get your attention. If you don't know what the prices are, you wouldn't know this is a potentially good deal. The house needs $30K in repairs. How do you know? Because you have educated yourself in how to estimate repairs. $130K invested for an after repair value (ARV) of $200K is a really good deal where I come from. Just an example of knowing your market. If you can buy a house for $35K and fix it up for another $15K ($50K invested). How much would you need to get in monthly rent for that to be a good deal to you? You need to know the answer. If you know that rent in that area is $850-900, I consider that a good investment as a buy an hold. Every market will be a little different, so it isn't wise to buy outside of an area that you know well.