Choosing & Researching A Potential Market?

Question

Hi Everyone,

I'm looking for a place where I can buy-and-hold multi-families and single family homes for the foreseeable future.

I know that it is recommended to invest in your own backyard, but I'm not to confident in the current area that I live in.

I'd like to invest in the Seattle and/or surrounding areas, as well as move to the location that I decide to invest.

Does anyone have any suggestions on how to research a potential real estate market? Is there any economic indicators that you specifically look for?

If anyone knows of good websites, books, or people to talk to I'd really appreciate it!

Brandon Turner · Answer

David Gellner You can always come down to Aberdeen! You won't like the appreciation, or the people, but the cashflow is pretty :)

Karen Margrave · Answer

David Gellner  1st off, set up keyword alerts here on BP. There are some investors on here that live in Seattle. Take the time to dig around on here, and you will be able to get all different types of info on how to proceed.

You can also go on to the MLS for the area you're interested in and look around, or go on to realtor.com.  Here's a site that is linked on Builderonline that has local data. You can input any area. http://www.builderonline.com/local-housing-data/ Good luck!

OH! and @Brandon Turner is in Seattle!

George Paiva · Answer

Start with population trends from the Census, Then cross reference in employment numbers from the Bureau of Labor Statistics.  This will be a start.  Then depending on what are your key metrics you are looking for in a property you can narrow down a bit further.

I live in an area that has dead population and employment upward trends so I have to use statistics to my advantage.  Yes I still invest in my backyard if I can get a very good deal but will typically require a years effort and money to get turned around.

I don't see any issue with washington state. 3% bump in Pop and 2% in Employment:

CENSUS 2010-2012					
State	Projected population (July 1, 2012)	Estimated population (July 1, 2010)	% Change		
				%	%
				Change	Change
North Dakota	 672,591 	 699,628 	4%	5%	-0.30
Utah	 2,763,885 	 2,855,287 	3%	2%	-0.80
Colorado	 5,029,196 	 5,187,582 	3%	2%	-0.30
Alaska	 710,231 	 731,449 	3%	0%	-0.60
Washington	 6,724,543 	 6,897,012 	3%	2%	-0.90

Dean Letfus · Answer

I think there are 2 main factors, rental demand and property values.

Demand is driven by growing population, employment and rental/ownership demographics.

Values are driven by population, employment and property cyclical conditions.
All of that data is publicly available so do your research and pick your city.  I ended up in Memphis and Phoenix after my research but that was 4 years ago....  City-data.com is an awesome free resource for data.

Jeff Brown · Answer

Investing in your own 'backyard' only because it's where you live, makes no sense. When you retire on your cash flow, will you care where the money comes from? :)

Ryan VanPatten · Answer

ReNewing this topic...

@David Gellner Have you come up with a good list of sources/tools to use when looking for a new market?

I agree with @Dean Letfus City-Data is a great source.

Anybody else have some good indicators that they look at for market trends?  If everyone could mention one, then we could have a great list.

So far it looks like we have;

• School ratings (What source do you use?)
• Population Growth (Census)
• Employment Numbers/Growth (Bureau of Labor Statistics)

I look forward to hearing what you have to say.

Kerry Baird · Answer

That sounds like such a great plan!  I would love to do an RV Exploration Trip when we return from the UK.  Thanks for the idea~

Zigmunt Smigaj · Answer

I work overseas quite a bit and will be living in Kuwait for the next year with the military, I too have had trouble deciding on which market to invest in.  I currently don't have a home in the U.S. and plan to spend roughly a year in a RV trailer when I get back in order to research several markets/cities based on the "numbers" which can be pulled from the internet.

Once I have a couple target markets I'll put "boots on the ground"  to get a proper feel for the area and meet local investors.   I dont plan to live where I invest due to work.... yet I think we should at least spend some time in the target market once you've decided on one....hence my trailer becomes part of my overall strategy and justified fun expense :)

I unfortunately dont know what I'm actually looking for at the moment but I'm sure a year will help me define the "what, how, and why" a market is worth our efforts.

-Cheers!

Jonny Lambert · Answer

New to BP and I found this topic very useful one year later!

#Loving BiggerPockets!

David Gellner · Answer

Brandon Turner Haha! I'll have to think about that! =)

Choosing & Researching A Potential Market?

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