Out of State Investing

[Kevin Suttles]

Good morning BP Family ! I am looking to invest outside of my home market. Based off of an experience you may have had, what are some things I should avoid and things I should focus on. I know putting together a good team is key. Any other tips or guidance would be great ! Thank you.

[Art Perkitny]

@Kevin Suttles

I second what everyone else is saying. Assembling a great team is always key. 

Having said that, selecting the location is also of great importance. 

To select a great market I would do the following: 

 I would start by defining my investing goals. That is, what is my appetite for cash flow vs appreciation. Also, how risk averse/affine am I. These parameters will help decide what kind of yields you are searching for, which you can use to filter down your list of macro markets.

Then I would start by looking at the macro market's fundamentals, that is the population, job and income growth over time.

After that, I would look to see what the rents and home prices are and how those are trending as well.

I would do a similar analysis, but at the sub-market level for the metro area you are considering investing in.

Other metrics that I find valuable to understand are household income, poverty, unemployment, and educational attainment. Also, the trend for the aforementioned metrics is also very important.

Lastly, you could study permit data to get a better idea of how the relationship between supply and demand is trending in your target market.

Hope this helps!