Finding your target market

[Curtis Robbins]

So I'm planning to buy multiple properties in Indy for 2019 (3 or more). I've lived here all my life, and recognize good numbers when I see them, but I'm really struggling to determine a targeting approach. I'm a complete numbers guy, and don't find myself inclined by appearances or location, which really leaves me blowing in the wind. I've read about this a lot, and have heard all the popular advice;

• Buy Where You would want to live
• Make sure you hit the 1% rule (which is apparently easy in Indy)
• Expect increasing/decreasing costs of maintenance, vacancy, and supervision as you move up/down the tenancy quality scale
• Focus on just a few niche areas of your market, and become the expert
• etc.

However, i'm having a hard time pulling all of this info together and applying it. I look around Indy, and I see obvious places to invest, but they seem over-saturated with investors already and I wonder how much success I could actually achieve there (fountain square, I'm looking at you). Conversely, I see areas with lots of deals, where the numbers look pretty but the neighbors don't. 

There seems to be plenty of opportunity and great places to buy in Indy, but they are all stiff with competition. The deals I see from wholesalers seem to focus on D-Class communities that fail the 'would I live here?' test. Implying to me, that the B/C properties change hands prior to hitting the whole sale lists (other than turnkeys). Meaning, I need to find those on my own.

So with all that said, I have a few questions;

1. How do you choose a target market, in a city full of great choices? And how worried should I be about competition in those markets? Should I be concerned with my competition at all?
2. Are there markets I should never buy in, no matter how good the deal? Or do numbers dictate all (assuming appropriate risk tolerance is present)?
   • Further, would something like this really be worth-while, because of the lower competition in these markets? I mean, I'm sure there are already investors in these high risk areas, but I really question whether a house like that could be mathematically worth it given the risk of poor tenants, crime, vacancy, and listing challenges. Am I wrong?
3. Should I be casting a broad net, say all of indy where math works? Or would I be better, as some would say, to focus on a few sub-markets?

Thanks in advance.

[Mike D'Arrigo]

@Curtis Robbins A few things jump out in your post that I would caution you against. 

1. It's great to be a numbers guy but appearance and location are extremely important. Indianapolis can be a great investment market but only when you focus on good locations that will perform and that doesn't include low end, D Class neighborhoods. Don't get so numbers driven that you get lured in by unrealistic projections for cheap properties in rough areas. That's the number one mistake that I think investors make and it's one that you can't recover from. Your only option is to sell to some other poor, unsuspecting investor.
2. Don't get too hung up on the 1% rule. It is not a measurement of ROI. It's simply a quick metric to see if an opportunity is worth evaluating further.
3. Buy where you would want to live. The "would I live there" test makes no sense. It says nothing about whether it is a good rental property. You're not living there so it doesn't matter. The important thing is that it is a neighborhood that can attract responsible tenants. That doesn't mean you would want to live there. 

I would strongly recommend not buying in D class neighborhoods just because there are more properties available. They are available for a reason. You need to clearly define your criteria and once you do, stick to it.