Beginners Market Analysis

[Nicholas Gayton]

Hello BP!

This is the 1st time I've made a post on BP. Hopefully first of many as I learn more about real estate investing and execute on the first deal!

My partner and I have been doing a ton of work (probably too much analysis) on determining which market we should invest in out of state. We both live in San Francisco, and as you know the market does not cash flow. Together we created a market analysis of different and popular markets across the U.S. to invest in.

Feel free to check out our analysis using the following link: https://docs.google.com/spread...

If anyone has any questions about how we created this, feel free to let me know!

Disclaimer: We are not professional data analyst and definitely not perfect, so there may be a few errors in this analysis. All info is public data online.

Hope this is useful for some.

Thanks!

[Mike D'Arrigo]

@Nicholas Gayton I think you're looking at a lot of the right things but you have to prioritize which are most important for your goals and objectives. You need to define those in order to help narrow the list down. You need to quickly get this list down to about 5 markets. The biggest mistake I see is making price to rent ratio your first priority for sorting markets. Price to rent is not a measure of cash flow or return on investment. It's a top line metric only. It might be a useful tool when comparing several opportunities within the same market but it becomes meaningless when comparing across markets. That's because the operating expenses vary across markets. For instance, TX has some of the highest property taxes and TX and FL have some of the highest insurance rates in the country. This makes it possible to have higher cash flow and COC returns in markets with lower rent to price ratios but also lower taxes and insurance. It's a misleading metric to compare markets, I also wouldn't pay much attention to city wide crime rates. Most larger markets have areas with low and high crime rates. One of the most important things is drilling down and knowing the neighborhoods. We're active in both Indianapolis and Kansas City and these are good examples of that. Both are excellent cash flow markets but you have to be in the right neighborhoods.