How a Rookie can understand a Market

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@Presly Ulen what we often recommend to our investors is to know your neighborhood. If you are from a certain area you may know about it block by block better than the next investor that just knows the general area. For example if you grew up in Hopkins you would likely know every part of the city and whats improving and declining.Your market is the twin cities area and the demand for rental housing, price to rents, and future trends.You need to know your city and what they expect from landlords and the costs involved in compliance.Neighborhoods are not the same block by block some have good demand blocks and others have undesirable blocks.Knowing your block would be understanding that the houses in a certain part of the neighborhood are In high demand because of the walking trail, proximity to transportation, or a school boundary, planned light rail, etc. On the other hand knowing the the blue house on the corner has always been a drug house, or the train runs through the neighborhood at night, or the neighborhood is starting to go downhill with rentals is important to know.Just seeing the numbers on the mls doesn’t tell you enough to evaluate, but knowing market, city, neighborhood, and blocks tell more of the story. You can see where having in depth knowledge of a certain area can be very helpful.

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Honestly, if you're just looking to house hack your first property, this resource might be a bit too high level, but it's a free course on Udemy with tons of valuable insights ranging from how to find a neighborhoods median income, crime levels, job growth, etc. This is highly valuable stuff if you scale into larger multifamily properties, but can also be a great way to gain a deeper understanding of a city as you try to narrow down prospective neighborhoods for a house hack. https://www.udemy.com/course/realfocus/learn/lecture/12998740?start=15#overviewHere's a link to a resource I personally use that I've found valuable as it compares census data across narrowly defined tracts. It can be a little weird to navigate at first, so let me know if it would be helpful to hop on a screen share and I can walk you through the basics. https://geomap.ffiec.gov/FFIECGeocMap/GeocodeMap1.aspxThese are all pretty sophisticated tools, but in the end, if you have boots on the ground in the city you're looking at, you'll be well served just driving the neighborhoods at different times of the day. Check the police department's crime stats for neighborhoods you're interested in, and take a gander at the quality of nearby elementary, middle, and highschools.

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I would try to keep it simple. Good market would be growing population, diversified economy, median income >3x median rent, increasing rent trend, low vacancy, low crime, close to employment & public transportation. You're already hitting most of that by targeting Twin Cities. Neighborhoods within the cities vary, but I'd focus on employment/public transport/low crime - you'll probably find yourself in a decent neighborhood if you do, & there are lower priced areas that fit that criteria.

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@Presly Ulen Network and if possible, partner with a mentor to learn how they navigate your market and learn the ins & outs of it. Meet someone for coffee and ask away. You'd be surprised that most people out there are willing to chat and share helpful information. Good luck.

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@Presly Ulen also look at what renters are looking for in the area. Think about what they want for amenities, characteristics, price, parking, transportation, pets and what is currently offered.

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@Presly Ulen You have the right idea. It takes understanding neighborhoods and portions of cities. Take my city for example. I live in Bloomington. But Bloomington is very different from East Bloomington near the mall of America to West Bloomington. The same home will have a much different price tag depending on where it is located within Bloomington. Also consider school districts. Those will sometimes be a good place to start. A home in the Bloomington Jefferson district will be worth more than a home in the Bloomington Kennedy portion. (I live in the Kennedy district for those that might think I’m just biased.)

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You got the idea. Driving round and understanding neighborhood dynamics is key. Finding the areas where there is migration and growth. Also know what the market rents are and cap rates. Research tenant laws. Also connecting with local investors, agents, PM, etc will help. Going to meet ups will help you learn the ropes of the business.