Tools to pick markets for investments
Rental Property Investor · Sausalito, CA · Member since 2016 · 35 posts · 21 votes
Greetings,
I seem to see this question come up a bunch: What out of state market should I invest in? The prevailing answer seems to be invest near where you live (or have connections such as family) to begin with. For many people like myself that doesn't work (I live in CA) well. So the questions are:
1) Are there any tools/service out there that help you filter out certain criteria and rank cities that match (e.g. growing population). BP has tools to analyze properties (along with Dealcheck), but are there tools to analyze markets?
2) I have been analyzing market based on my own personal criteria.
- Growing population
- Diversity of industries (particularly like technology)
- Sunbelt when possible
- University population
What are some criteria that you use to analyze markets? I promise to summarize all your answers into one post at the end so we can all crowdsource ideas.
@Carnet Williams There are multifamily syndicators that put out free content for choosing markets and neighborhoods, and where to exactly get that data. You can check out Neal Bawa’s “How to choose markets and neighborhoods” course on Udemy - a google search should get you there.
He has specifically backtested data so he gives thresholds of what you should be looking for (i.e. pop growth over 20% since 2000).
Joe Fairless, another syndicator, also has a podcast on how to choose markets - he looks at similar indicators as Neal. The transcript of the podcast is in his Syndicator School website. Both Joe and Neal have systematic approaches to choosing markets.
I felt that having thresholds was really helpful in analyzing markets so I could have some comparison point. Otherwise, it was hard to tell what the data was saying.
Hey Carnet!
So I struggled with this when I first started. I was thinking should I invest here in NYC or look in Jersey or Vegas/Austin. So I came up with a process that I used for it (using the information for Brandon Turners book).
1. Crime rate
2. School ratings
3. Population Growth
4. Transit options and times
5. Major businesses opening in the area
6. Price to Rent Ratio
7. Insurance Rates
8. Tax Rates
9. Unemployment Rates
Basically you want to do this research for any city and then compare the same research to another city you are thinking of investing in. This should give you an overview of how the city is and its rental potential. I actually made a youtube video and google form going over step by step on how I did this. If you want, dm me and I will send you the link for it.
@Carnet Williams There are multifamily syndicators that put out free content for choosing markets and neighborhoods, and where to exactly get that data. You can check out Neal Bawa’s “How to choose markets and neighborhoods” course on Udemy - a google search should get you there.
He has specifically backtested data so he gives thresholds of what you should be looking for (i.e. pop growth over 20% since 2000).
Joe Fairless, another syndicator, also has a podcast on how to choose markets - he looks at similar indicators as Neal. The transcript of the podcast is in his Syndicator School website. Both Joe and Neal have systematic approaches to choosing markets.
I felt that having thresholds was really helpful in analyzing markets so I could have some comparison point. Otherwise, it was hard to tell what the data was saying.
Greetings,
I seem to see this question come up a bunch: What out of state market should I invest in? The prevailing answer seems to be invest near where you live (or have connections such as family) to begin with. For many people like myself that doesn't work (I live in CA) well. So the questions are:
1) Are there any tools/service out there that help you filter out certain criteria and rank cities that match (e.g. growing population). BP has tools to analyze properties (along with Dealcheck), but are there tools to analyze markets?
2) I have been analyzing market based on my own personal criteria.
- Growing population
- Diversity of industries (particularly like technology)
- Sunbelt when possible
- University population
What are some criteria that you use to analyze markets? I promise to summarize all your answers into one post at the end so we can all crowdsource ideas.
Most people who are in high cost markets like California tend to hitup the fly over state. Or as well call them the Turnkey markets. Tons of turnkey markets out there. Many of these markets are very well represented by sellers & turnkey operators here on BiggerPockets. In no particular order I have listed some of the most popular markets for out of state investors
Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.
One thing to note when looking at the individual markets, you can make or loose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.
Another thought I had was how best to use Census data? It's a ton of information but would be great to see if there's a way to sort/filter by criteria that an investor is most interested in. I am realizing that there's a bit of art and science to investing. How I want to invest is going to be different than another person even though we may overlap in fundamentals of looking at a deal.
If we all used the same criteria to pick markets to invest in, we would all be scrambling and competiting with each other and there would only be one "right" market. That's not the case as we can all see. I'm guessing you all each have some "recipe" you are using? What's in yours?