Market choosing metrics

[Benny Gelbendorf]

Hi BP community,

At the moment I'm struggling with the market analysis phase.

In the beginning I research states at macro level and choose the strongest states by a metrics I've compiled (crime rate, employment diversity , vacant home percentage, state taxes , population growth rates, etc.). This approach led me to a dead-end as entry prices for most of the deals are above my financial capabilities (put aside financing from external source).

Now I've started looking at 2nd and 3rd tier states (no offense) and later on focusing on metropolitans / big cities within those states (micro approach), but I think this strategy is not good either.

Maybe the correct strategy is moving back and forth between micro and macro levels to provide winning formula for "correct" market.

What would you suggest ? How did you handle the market search phase ? What set of metrics did you use ?

Thanks in advance,

Benny

[Nathan Platter]

Hey @Benny Gelbendorf ,

I start with my home market (Minneapolis) Keep it simple, if you can't determine if your backyard is good/bad, identifying great/terrible neighborhoods then you can't conquer another neighborhood across the country.

As for metrics, I go with yes/no to simplify rather than a 1-10 grading system.

• Are jobs coming to X market? Yes/No
• Are renters wanting to live in this neighborhood? Yes/No
• Are reputable contractors wanting to do work in this neighborhood? Yes/No
• Am I OK if I get stuck with this property for 10 years? Yes/No
• Do I make money doing this particular deal?

You sound stuck in analysis paralysis. Simplify your thought process and grow your gut intuition, or find others who've got a good sense of your local market and use their knowledge/insight to make those good decisions.