Learning Your Market

[Aryelle Collins]

When learning how to invest in real estate, I often hear a lot of people say "know your market" or "learn your market". I asked someone how to do this 2 months ago and they told me I just have to get out there. Well as you can see those 2 months have passed and I have done one deal but I still do not fell like I know my market. If a foreign investor were to ask me " How is the market in your area?", I wouldn't have a clue as to where to begin and I don't want to be that investor. I want people to take me serious and want to work with me. I might as well go ahead and add a similar question, How will I know when the market changes?

[Alexander Zurn]

@Aryelle Collins I know what you mean, I have definitely been there and I still continue to adapt my speech when describing my market. The phrase "just get out there" insinuates that we need to, literally, get "out" there as if you could go into the housing market.

What is really meant by this phrase is to "watch" the market. Follow redfin, zillow, trulia updates. Get set up for MLS notifications from a Real Estate agent so you can watch your housing market as 2 bedroom, 3 bedroom, 4 bedroom properties with 1 bath, 2 bath so on and so forth are priced in your market (which means "the area you want to buy in"). As you become for familiar with the prices and rents (!), you will begin to have a better scope of the market and be able to talk about it without the computer right in front of you.

Here's an example. I live in Rhode Island. The overall RI market is stagnant with economic growth due to lack of increased jobs, high taxes (and more coming), and possibly overall small market. This effects the housing market as you might think it would. My specific area is in a higher end part of the state and the prices are just outrageous, due to its location and popular summer rental demands. Just about every house that comes on the market is overpriced for the rest of the state, but again, that is because of its location. 

As you can see, each state has economic characteristics that can play into the housing market. The more you watch your housing market, the better you'll be able to understand what effects your market.

I dragged on there but hopefully you get my point.

Disclaimer: I'll be curious to see if any RIREI hop in here and agree/disagree with my (mini) analysis of the state.

Good luck to you!