What target analysis do you do to ID the best areas to invest?

[Marc Estepa]

Hello! So, I'm new to REI and trying to do analysis to better target the area I want to invest in. As a noob, I naturally feel comfortable investing in the area I currently live (Tacoma, Washington) simply because I live here and can build a good network and team - but I am not opposed to expanding my search further!

Listening to various podcasts and news, I hear so many tidbits of data like - CoVID creating trends for people to move out of the city and to the suburbs. I’ve also read that current migration patterns in the US show people moving to the South and West.

Gathering all this information is great to help target different areas to invest, but it’s also maddening. If I’m going to embark on this journey and invest money, time and effort, I want to get the most bang for my buck and challenge myself - even if that means getting uncomfortable and investing out of state.  

I want to be able to build and refine a system to analyze the best places to invest in real estate regardless of where I choose to invest.  If I choose to invest in Texas, Kentucky or even California, I want to be able to use a system of analysis to narrow down certain areas to invest in aside from word of mouth.  At that point, it’s too late anyway, because everyone else listening is also trying to follow whoever is successful.  My point is, that guy did the analysis to identify these areas - but what is his method to the madness?!

My question to all of you REI veterans is this - what is your methodology for target analysis to best identify your areas of investment? Where are you pulling data? Just because I live in an area or like an area shouldn't be the only data points I use to determine where best to invest.

[Sherief Elbassuoni]

@Marc Estepa, at the beginning, it may be a good idea to stick to investing in your area instead of out of state. That said, Tacoma is pretty hot right now and listings tend to be sold over listing price with multiple offers. The area to invest depends on your investment strategy. The greater Seattle area generally tends to lean towards appreciation more than cash flow compared to other areas. That said, we still have deals in our local market that generate good positive cash flow. You just need an investor-friendly agent to help you find these deals. One of the good things about the Tacoma market is that it allows us to be more creative since it allows ADU while not living in the property. This can be one of the creative ideas to help you house hack and invest in a pretty expensive market like Tacoma. Let me know if you have questions and we can have a phone call or coffee to discuss more. Thanks