Newbie way to find out what out-of-state market to invest in

[Kin Meng Sio]

Hi all, just joined Bigger Pockets and I'm excited to connect with all of you! I'm working in the tech industry in Seattle and I'm trying to start doing out-of-state BRRRR, as Seattle is too expensive to start with.

Then I'm facing my first challenge: which market should invest in? I've heard couple good options from podcasts and other investors but I decided to do some homework. From my perspective, I want to invest in places where I can imagine myself living in and having a good life, so I started googling best places to live in the USA, and found https://realestate.usnews.com/places/rankings/best-places-to-live.

US news has done some extensive research for 125 metro areas across the country. Then they came up with multiple indices for ranking (you can find out how they come up with their indices here) Some of the ranking criteria includes home prices, rent, job market, cost of living, net migration, etc. PERFECT! Sounds like some criteria I would look at as an investor. Then I did some web scrapping to pull the valuable data and stick them in a spreadsheet. For those who are interested in the data and play it around yourself, click here to download it from my Google drive. 

For those who don't wanna deal with spreadsheet, this is what it roughly looks like:

After playing around the data a bit,  we picked 4 markets for further investigation and analysis. I also stick some of my emotional thoughts on these markets:

1. Fayetteville, AR

Pros: pretty well-rounded in terms of cost of living, quality of life, job market, net migration. Housing price fits my price range of < $200k.

Cons: fairly small metro area (500K population). Small metro size means less opportunities (generally compared to bigger metro areas).

2. Des Moines, IA

Pros: pretty well-rounded in terms of cost of living, quality of life, job market, net migration. Housing price fits my price range of < $200k. I have family in Minnesota so I may be able to get some support there too. 

Cons: fairly small metro area (600K population). Small metro size means less opportunities (generally compared to bigger metro areas).

3. Boise, ID

Pros: High appreciation, and I've personally been there so I have a rough idea of what it feels like. Closer to Seattle area so it's easier to fly there for anything. 

Cons: To start off my investment career I'd rather start in market with more steady growth. Rapid appreciation sounds attractive but also scared me a bit for market downturn. 

4. Houston, TX 

Pros: I have friends down there so I can get more local knowledge. Big metro area seems to have more opportunities in general.

Cons: Bigger metro area also means more competition (especially larger players).  

By no means I'm trusting this dataset 100% but it helps me narrow down for further actions. My next steps:

1. Further research on these 4 markets and get down to a winner I will focus on.

2. Using a similar approach to lock down what neighborhoods to invest.

3. Start connecting with local investors, agents, property managers, contractors to build a team. 

4. Fly down there to connect with people. Live in local Airbnb to get a feeling. 

5. Find deals 

Love to hear all your feedback on my approach! Please share what you will look for when considering an out-of-state market. Will also appreciate tips & tricks on neighborhood research. 

[Nicole Hoss]

Hello @Kin Meng Sio! Interesting data and it appears you've really started a good analysis of each location. I can speak to the Des Moines market because I live here and understand that this is a good place to BRRRR for the locals. I have a full-time job and don't have the time to manage a BRRRR so I have chosen to purchase turnkey properties in Indianapolis. The taxes in Iowa are WAY too high to be able to successfully invest in Des Moines with a buy/hold strategy.

If you'd like to talk more about why I have gone the TK route as an OOS investor and have done well, DM me! Also, I can give you more insight into the DSM market and how you might be able to BRRRR here.