Choosing OOS Market for Rentals

[Mark Weinstein]

Hey BP,

This question is for the out of state rental investors. What criteria do you use when choosing your out of state markets? Are there certain numbers you use (in choosing the market, not in choosing the property) in making your decision? How important really are stats like transportation or schools? A lot of people on BP explain their OOS investing success stories then when I do research on their markets their schools are horrible and public transit sucks but yet these guys are finding huge success in finding cash flowing properties. Also, how wide is the range of the market you’re choosing (state, a city, a neighborhood, etc.)?

Just doing basic research on city stats and I’m seeing that when I choose a city, the numbers can vary significantly just from zip code to zip code in that very same city. For example, PTR for the whole city of Toledo is .86% but when you specify the zip code 43605 that changes to 1.44%. Of course, that means other zip codes in Toledo are much lower to bring the average where it is, but I’m interested to know how you guys make decisions on those situations.

Any other criteria, numbers, stats, etc. that you guys use to determine your markets would be great. Thank you!

[Andrea Weule]

Market Analysis is key. When investing remote, I like to first look at the job market - Is it strong, diverse and low unemployment? I like unemployment less than 6% during up and down times. Second, I move into market swings - Are the home prices fairly stable with some up growth? I like to to avoid markets that have big runs and crashes (FL and LV, NV). Finally, once I find a city I'm comfortable with I like to make sure I explore the pockets/neighborhoods of that market. Where is it safe to invest, low crime, good transit, quality employment, etc.

I'm based in Denver and the home prices are too high for me to cashflow what I want doing rentals.  We wholesale and do fix and flips here.  We invest in 18 different markets for various reasons, some rental, some flip and wholesale in them all.  Shoot me a DM if you ever need a contact in a remote market.  I may just have someone.  

Best of Success!