Defining Your Market

[Ben Dymond]

Hi,

I wasn't able to find this topic in a previous thread, so I thought starting a new discussion might work. I was wondering what thoughts there are for defining a market. I am from a relatively rural area, so it seems the methods that would be used in suburbs of larger cities, or areas like Cali, with high population density might not be applicable. 

In my area neighborhoods are generally viewed as a development that was created when a farm was purchased and divided up, so the number of properties available is limited from "neighborhood to neighborhood". 

For a new investor, initially focusing on buy and hold. Is it more important to be near my own residence, potentially limiting supply, or would it be more advantageous to cast a wider net, realizing the management becomes more challenging? Or, like in everything else, does it depend? :-) Thoughts/ideas are appreciated. 

Thanks all,

Ben  

[Richard C.]

Originally posted by @John McConnell:

Besides driving neighborhoods, connecting with a local agent, scouring zillow, attending meetings and meeting locals what else would you recommend to someone jut coming to a new market. I am from the Midwest and have moved around quite a bit being in the military. I just recently moved to the New England area and the houses here a very different from what I have been exposed to. I will be here for about 5 - 6 years and I am just trying to start investing...looking for multi 3-4 plex in the so. NH middle MA area. Thanks for the post!

 Driving neighborhoods to get a feel for them can be difficult for people from other regions of the country, as it sounds like you have realized.  A 150-year-old wood frame house that would be a teardown in most of the South or a $40k class C rental in the Midwest might be a very desirable house worth hundreds of thousands.  Also, most of New England grew pretty organically, and not in a planned way.  So it is not at all unusual to find a million dollar house a couple hundred yards down the same road as a rotting trailer.  There aren't a lot of large planned sudivisions.

I've never attended a REIA meeting, so I have no idea of their value.

Zillow's accuracy issues are well known, but because of low sales volume in rural NH, I think they may be especially bad here.  I routinely see values off by 50%, and rent "zestimates" wrong by 25%.  So be careful there.

Reasonably modern purpose-built fourplexes like you see in much of the country are very rare.  Wood triple deckers are common in Manchester, slightly less so in Nashua and other towns.

The biggest variable in values, in my experience, is the quality of the school district.  This can vary wildly in neighboring towns that look superficially similar.

A good general rule of thumb in old mill towns in NH or Central Mass (which is where I grew up, there and Boston.)  There is usually a river.  That is where the mills (and jobs) were.  Worker housing was down near the river, close to the work but also the heat and general unpleasantness.  Higher classes lived on the surrounding hills, since they didn't have to walk to work and that way they caught the breezes.  If you're in a mill town in New England and want to find the nicer neighborhoods, walk uphill.

If I were looking for a multi in NH now (which I am not) and did not want to deal with Manchester, I would be looking hard in Milford, the town immediately to Nashua's west.  Solid demographics, good but not outstanding school system, decent value available.  Get an agent there, and start reading the listings, and I think you may find what you are looking for.