Determining the RIGHT market

[Daniel Perez]

Hello everyone!

I would also like to introduce myself to all the group members. To interact with each of you, share my experience and vice versa. 

I’m located in manchester, CT ( a submarket of CT) and after aggressively looking for deals. I can’t find anything that makes sense ! And between investors of MA and NY The market is saturated, the cap rates have been reduced by 20%! I’m now ready to choose another market where it makes sense and develop the right team for acquisitions. What are your thoughts? And where should I begin my research to determine the RIGHT market ? Thank you all in advance !! 

[Lee Ripma]

I really think that the search for the elusive BEST market really plagues folks. There are so many markets where you can invest in real estate. The point that others have made is that you’ve got to find a market that works for your goals. Within any larger market there are so many sub-markets, sometimes down to individual blocks. So you’ve really got to find a sub-market that will work for your goals. So it will help to really define your goals, then find a market that will work for the strategy you are going to use to meet those goals. The first deal is likely to be hard and time intensive, since so many things will be new. The first one will be far from perfect and will give you a chance to refine your strategy. Since the first one will be hard, make it as easy as you can to get there. Hence the advice of close to your house. If there is nothing you like within a 2-5 hour drive, then find something with an inexpensive and/or short flight.

I personally invest in the Kansas City market and I live in California. I wish that I could drive there! Luckily I can get a painless direct flight from LA but I go a lot! I spent a lot of time getting to know Kansas City.

I am still looking at deals in Kansas City, specifically in some sub-markets that I like. I recently decided to expand my search to Cleveland as well.

I chose Cleveland because of the Marcus and Milichap 2018 MF forecast. I’m looking for markets that have inexpensive properties on a per unit basis, some appreciation, and a MF housing stock where value-add apartment repositioning is possible. I’m also looking for places with cheap direct flights from LA (aka Spirit flies there). I’ve been following the Cleveland forums and doing research on the different areas and sub-markets. Soon I will go and look at a ton of areas around Cleveland and take brokers to lunch and generally network with anyone I can there. Then I will narrow down areas that I would buy value-add small apartments in. I’m presenting this as a way for you to see how others might think about choosing a market. With Cleveland I’m not positive that I’ll buy there, but I’m going to put a lot of energy into learning it and then decide.

My overall, long-winded point, is that there is no BEST market, only best for YOU. There are RE investors in every market in the country making money.

Good luck and keep us posted!