How to rationally select a long-distance market for investing?

[TJ Walker]

I live in Long Island, NY, where hideous shacks cost half a million and only rent for $2000 a month, so I am excited about investing long distance. (My first investment duplex in NY metro is cashflow negative-I hadn't found bigger pockets yet!) Once the decision has been made to long-distance invest, and parameters have been set (SFH, buy and hold), how should one rationally select a market? Why not simply pick the #1 market, which is currently Memphis? Are there other variables that should be considered? If I select the current #1 market, does that mean it is already too late for that market? Is there a way of showing momentum in markets, i.e. finding a market that was #9 2 years ago, #5 last year, #3 this year and will be number 1 in 2 years after I am already in that market? If he first deal can work in a long-distance market, shouldn't one stick with that market? Won't there be numerous efficiencies by staying in the same long-distance market?

[Jennifer Beadles]

@TJ Walker Here's what I did: I had my assistant take 10 news articles about the best cities to invest and list out the top ten that came up most consistently. Then I had her search for the following criteria on each city:

Population trends from 2010 to now (increase or decrease)

Unemployment rate

Job growth

Price to rent ratio

Crime rating

The most important criteria to me was the population trends. I did not want to be investing in a market that is decreasing in population, which is usually due to crime or lack of jobs. 

She then rated the cities in order from best to least, and several were pretty close.

Next I started searching for a team to source deals. If it proved difficult to build a team in an area then I moved on to the next city.

I was able to pin point Indianapolis, Nashville, Oklahoma City, Jacksonville and Atlanta as the best cities to invest given my criteria.

My approach was pretty data driven based on my goals and specific return criteria but you could also just take the top 10 list and apply one factor to narrow down to.

I'd be careful about Memphis, low school ratings, slight decline in population, high crime rates.