Looking at areas where other investors aren't

[Lam N.]

First of all, sorry if I step on anyone's toes.  I can be dense about that.

From our research before we started, 14% net ROI is suppose to be really really good. Also the 1% rule.

The thing is when we first started diving in we ran into the same problem that everybody faces when they wanted to go to a popular restaurant: WAIT IN LONG LINES!  There were always more experienced investors with money coming out of their ears stomping our small operation.  So, over time we started moving further and further away from the main markets.

We now only deal business in places that other investors are not. We specifically look for and at places that other investors are not. And the result is instead of 1% we are finding ourselves making 4-7%. Our net ROI has been consistently 30-40%.

I've had people contacting me telling me this place or that place will be a good investment area.  I get nervous when I get such a message because I used to get those messages and those places turned out to be absolute mayhems of investors stepping on each other overpaying for places to get a piece of the pie.

We now have 5 properties with tenants in there already replacing my income as an engineer.  All those places have net ROIs in the 35-40% area.  Just bought a 6th place of a move in ready house.  Needs some lite cleaning and a few touchups before we list it.  Working on a 7th place.  These 2 places will have net ROIs closer to 40%.

Anyone else have given up on crowded places and are moving into places where other investors aren't?

[Arissa Pedroza]

To me, the numbers don't lie.  Use statistics and analyze the places you think you may want to invest in.  Personally, I use bestplaces.net.  I live and invest in San Antonio, so here are some key indicators I use and you can search by area, city or even neighborhood.  Using this website, look for the following indicators:

- On the landing page, look at the Median Home Price - This is where you want to be for the MAX ARV

- On the landing page, look at the population - is it increasing or decreasing?  

- On the left side of the page, under categories, you can look at the Cost of Living and compare the city to state and the national average.  For example, San Antonio has an average Median Home Sales Price of $174k compared to Texas as a state at $193k and the National Home Sales Price of $219.  This tells you that San Antonio is less expensive than most states and within the state itself

- Under the same left tab, you will see Job Market.  You will want to look at Unemployment Rate and compare it to the National Average and make sure it is BELOW it.  In addition, you will want to make sure you look at the Future Job Growth and make sure it is ABOVE the National Average.  This will be key indicators about the jobs, which is important with how the City will do for current and future work.

- Under Housing Stats, you will want to look at Home Appreciation in the last 12 months and 5 years and compare that to the National Average.  In addition, you can look at the appreciation in the last 10 years to see how the last recession impacted the area.  San Antonio was not hit very hard as the appreciation is 44% vs the National Average is 28%.  You will also want to look at Homes Owned vs Homes Vacant.  You can scroll down on Homes Vacant and it will break that number down.  Pay attention to Homes Rented and it will tell you if it is a good cash flow area if it is above the National Average. It also lets you know about the average rents based on bedrooms.

Hope this helps!

Arissa