How do you choose a market to invest in?

[Ellen Dempsey]

Hi everyone! I wonder what indicators people pay attention to when they choose the market to invest in? For example, this article mentions that such factors as demand, rental rate, and HPI are the main factors for RE investors. But what factors are important for you? How are you doing your research and deciding where to invest?

[Joe Villeneuve]

None of the above.  None of them have a consistent/standard cash flow (which is really what you're looking for) attached to them...so why use them.  Just add the monthly expenses of properties in a 3 sq mile area that are the same sq ftg (or where the largest is within 10 % more than the smallest) and subtract that sum from the rents using the same size and location criteria.  The resulting cash flow is the number you're looking for for comparison.

Now take the sold comps in that same area and sq ftg, and use that as your guide for the monthly payments.  Subtract that from the previous number and you have your "magic number".

Don't use percentages to calculate any of the above, that's the lazy way...use actual numbers.