How a Rookie can understand a Market

[Presly Ulen]

I am a new investor saving and looking for my first house hack in Minneapolis or surrounding area. I hear a lot about people saying you need to understand and research your market, but what exactly does this mean? I am aware of the neighborhood classifications and i understand wanting to look and crime maps, and to look for areas that show signs of growing. I am just wondering if i am missing anything that i should know or what other investors do to look at different areas, thank you for any help.

Any books or articles that can explain this in more detail for me would help as well.

[Amber Gonion]

@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.