Market Research

[Michael D.]

I'm an out-of-state landlord with properties in two different markets. Both of these markets I ended up in somewhat by accident, though I did do some basic research on them prior to investing. One has worked out very well, the other not so much.

I would be interested in continuing to invest in one of these markets, but I think it may also be a good idea to diversify into one more market instead. This time I'd like to be a lot more deliberate about finding that market though.

How do you all go about finding new markets to invest in, and how do you evaluate them? (I'm a buy/hold rental landlord).

Are there any markets in particular that are great for buy/hold, high cap-rates that I should be looking at right now?

[Jeffrey H.]

When I am looking at a new market, other than the typical checking comparables - I take a look at bestplaces.net and evaluate the economics, population trends, and occupancy metrics, etc.

Finally, I put a test ad (with representative photos) out near the subject property at the market rent levels I expect to be able to get.  If you're getting 3 calls per day or more on average over 10 days you can safely assume that there will be sufficient demand to rent the place in a timely manner.

I used to get really worried when population was stagnant or slightly down, but have found several cases, especially with affordable housing, where in a down market you still have very healthy demand.

Good luck.