Market Selection Criteria

[Pramod Yash]

I admit - I am a data geek. 

I suspect a 2020 recession so I am utilizing the time now to learn as much as possible about REI. I am also quantitatively gifted (forced to learn, lets say) with some technical chops, so wanted to build a better mousetrap for market/neighborhood/block selection. I realize that there are various market monitors like housing alerts out there but wanted to see if I can come up with something equally good - but free to poke around.

What are your criteria for market selection and neighborhood targeting. This is particularly relevant if you are an OOS investor.

I have listed a few that I thought might be relevant; is there anything else that you find compelling and that has worked for you?

Thanks much.

• Net Domestic Migration
• Highly Educated Workforce
• Looking at typical Population, Job, Income Growth indicators
• Want outsized job growth above all else
• Younger, more productive, highly educated people moving into new markets
• Workforce - quality of workforce; potential to have outsized GDP growth
• Pro-Business Climates
• Political Climate
• Tax Climate
• Schools
• Walk Scores
• Sales Tax Collections
• Retail Sales
• Diversity
• Price/Rent ratio
• Home Price growth rate
• Income growth rate
• SFR to MF concentration

[John Casmon]

Lots of good data points and I look at most of them, especially as it pertains to population and jobs. In addition, we're also monitoring key multifamily trends - rent growth, new developments, net absorption, and vacancy rates.

At it's simplest level, we want to use all this data to help us determine if future demand will exceed present demand and build our business plan accordingly.

One critical element is understanding the human factor. Having the best market on paper and not being able to build the right team won't help when it's time to execute.  If you're investing OOS, take the time to find the best PM and ground team that you can. Often they can help you navigate some of the sub-markets as well.