Investing in smaller markets

[Tim Nicholas]

I live in Lake Charles La. and right now we are a couple of years into an economic exspansion and the big boys are building houses like crazy. I want to invest in buy hold real estate but the prices are currently high in this sellers market, but I think that soon the market will be flooded with homes, therefore as a newbie I don't want to get stuck with over inflated property. So I am thinking of investing in the smaller surrounding communitues or should I do like the Texans "go big or go home?" Any thoughts or suggestions to this or comments on similiar scenarios?

[David Thompson]

Tim,

I would look for growth drivers, catalysts and supply / demand data.  Pop/job growth is always a great start vs natl markets numbers.  Diversity of industry is another important factor as you don't want a military base to close, or a large employer to leave.  Is it reliant on tourism?  Weather impacts?  Just seeing the impacts in Houston, even if folks have insurance, businesses may be hurt or shut down and tourism impacted for quite some time  Understanding what the city is supporting to encourage growth in the area by visiting local chamber of commerce sites and zoning / planning.  I think a larger market gives you more leeway if things shift a bit while local markets can do well but small headwinds could be more impactful.  Our syndication partners for instance won't look at anything < 250K population (MSA).