Moving across the country, how to find a hot market?

Question

Hi all,

I've decided to make a big change and move out of the Los angeles, CA area in order to begin my real estate career. I can work anywhere in the country due to my income source coming from online.

I know that opportunities can be had anywhere if an investor is astute, but my mindset about that is different. I want to maximize my opportunities by getting into markets that have more potential and lower barriers to entry (ie lower than $440k median home prices)

On the other hand I am a young guy and would still like to live nearby a big city. I know this will make finding good real estate markets harder but I can't completely neglect my social life.

So my question becomes this: How do I find data on what areas have better than average potential for investing? I know employment rate, population growth, median income, etc are all factors. But where do I find this information? And what other factors should I look at (especially anything not quantifiable)

Thanks

Account Closed · Answer

New Orleans look possible. Lots of fun and parties there. Population is increasing, still lots of fixers available.

David G · Answer

You can find real estate agent opinions of how their local market is at

http://realtytimes.com/rtmcrtop/home.htm

All the information there is free.

You should definitely look and consider the input before you move.

Also check out the landlord/tenant laws and foreclosure laws and contractor laws.

Some state are investor friendly others are terrible (WA and IL for example).

-David G.

Mark McGlothlin · Answer

AD - I've been traveling for a few days and haven't been on the site - so I'm a bit late...

There's a lot of great information out there to assess markets by - here's a great one to think about - population growth in the later half of the decade as compared to the first as evidence of a market that has (for whatever reason) grown rapidly and created a strong demand for housing.

Probably the other key factor is job growth, particularly in today's economic times, it's critical to driving housing demand;  the Bureau of Labor Statistics is the place to find data to compare city to city and state to state.

My team posts free state by state rankings of employment growth and unemployment (6 month rolling averages) on our free data page of our website - the six month rolling averages tend to dampen out the anomalies that creep into the data.

Have fun looking around - there are some markets out there today with astoundingly good fundamentals despite the doom and gloom you hear about daily in the news.

Dave P. · Answer

All I have to say is, "Good for you". Pick somewhere fun and enjoy it.

Will Barnard · Answer

I like Texas too, and although the property taxes are higher than in some states, so are the rents you can receive which offset the expense. Further more, if you move to Texas and become a resident, there are no state income taxes which will also benefit you and offset the higher prop. taxes.

Kathy Potter · Answer

Looks like you have a plan! I am from Texas. I like San Antonio/Austin area and Dallas/Ft Worth is growing too.

Ashan D · Answer

I am somewhere inbetween those 2. I definitely want to buy distressed properties and rehab them, but I don't really want to become a full time landlord and I don't trust property management for residential properties.

So my plan is to rehab and rent out 2-5 properties including my first purchase which will be my residence (I'm single so I can rent all the other rooms), then after a year or so when I can 1031 most of them, I'll sell them and pyramid into my first commercial rehab. I want commercial tenants for the long term so my target is retail or office, and I plan to hold the building indefinitely from there unless there is a very good reason to sell.

Anyways despite high property taxes, Texas looks like my ideal spot. I actually like the high property taxes because they help to suppress property values, and I don't value appreciation that much because I want to make money at the rehab/turnaround phase. Since Commercial value is tied strictly to NOI and cap rate I figure I could make almost as much money in a stagnating market as a appreciating one (because if the market is appreciating, every larger property I pyramid into will cost an appreciation premium)

Will Barnard · Answer

Another thing to consider is what type of RE investing do you want to specialize in. If you are planning a buy and hold strategy (becoming a landlord), you have many areas to choose from, some better than others. If you want to fix and flip / rehab, there are many markets where this is too "risky" for lack of a better word.

Decide what you want to do and then where you will do it is my suggetion in a nut shell.

Kathy Potter · Answer

Read lots of articles like this one: http://promo.realestate.yahoo.com/top-10-fastest-growing-cities:-the-big-easy-picks-up-the-pace.html

But read alot of them because they will all say something different. But you will end up with a short list of places to consider after reading alot.

Go to realtytimes.com and then "locate an agent" and read what agents in those markets are saying about their local market conditions. You can link to their blogs and websites for more info. Once you have narrowed your list call a few agents in the area to get the real scoop.

Google for any info you want to know about an area. Just be sure the info you are reading is current, summer 2008, info.

Be sure to check property tax rates & insurance rates in areas. Some areas will have home prices that appear to be "to good to be true" but once you consider the other factors it might not be that great or equal to another location with higher prices but much lower taxes and insurance.
Also some states have state income tax and others do not. States without that income tax will normally have higher taxes. You just have to weigh what suits your situation.

Read articles in the local paper of the areas you are considering, about housing market, jobs coming in, etc.
Consider the climate you want to live in too.
Add Raliegh/Cary, North Carolina to your list.
Hope this help! Good luck!