Market Research - Why, How To & How I Can Help

[Stephanie Beard]

Hi There,

For those of you who currently own real estate or are looking to get started with your real estate ventures, I can not stress enough the importance of market research.

My experience in property management has lead me to be acquired by a large nonprofit company to complete a market study for their company. They want to sell or lease their current five story building and acquire new property to relocate their corporate offices. They also have over 50 locations that they want market research completed for... Among other tasks/goals detailed in the contract I have with them. I'm kind-of their "Property Management Consultant, Director of Real Estate Development & Research / Eexecutive Assistant."  All done virtually :)

I also work with various local landlords who are lost with regards to whether or not they should increase rents, when to increase rents, and how to go about improving their ROI.
Research. Research. Research. But don't over do it. You have to know who your "market comparables" (market comps) are, and who isn't... and sometimes that alone can be an overwhelming and daunting task. So here are some simple guidelines to get you started and to help reduce the anxiety that can sometimes accompany market research.

1) DEFINE GOALS. Are you trying to increase current rents? Sell a property? Acquire
    new property? List anything and everything you want to achieve, and set them as
    measurable and achievable goals with reasonable deadlines.

2) CREATE DATABASES.  Are you familiar with Excel? Word? Microsoft Office?
    Whatever it might be, use it.  Start with your first goal, and create a database to input
    all of your information. Ex: If your first goal is to compare average rents in the area to
    your three family income property, the first database you should create is a
    spreadsheet to hold this information. You also need to set parameters, such as "My
    property is dated so I am only going to look at properties of similar age/appearance
    /size. My property is in Middleboro, MA and there are not many apartments on the
    market in Middleboro at this time, so I am keeping my research to towns within a 25
    minute drive."

3) ANALYSIS. Once you have your data, take a break from it. Then go back to review it
    with a fresh, clear mind.  Maybe you decided to add or remove some data. Make a
    note as to why. Then WRITE down your analysis. Ex: Yes it is easy to look at it and say,
    "okay the average rent per SF is $1.36 and I am charging $1.50 so maybe I should
    keep my rent where it is or decrease it."  What isn't always easy, is the "added value."
    Maybe your rent is higher, and your apartments aren't as cosmetically stunning as the
    competition. But maybe you have something else to offer. Is it the newest? No.
    However, you include utilities, have a large fenced in yard, and on-site laundry, and no
    one else does. These are "added value" that can be broken down further (if you
    please) and justify your higher than average market rent.

4) FUNDING.  This of course, is only in "some cases" pending your projects and real
    estate needs. So, this step may or may not apply to you. If it does though, this is yet
    another thing to consider.  Do you have enough cash flow to pull from one RE project
    and invest into another?  Do you use a traditional bank loan -- and if so, which one?
    Are you familiar with nontraditional loans such as hard money lending, angel investors,
    and "pay for success" programs?  In some cases, if you need this step, there is even
    more research to be completed.

Of course, this is all "in a nut-shell" and any professional experienced with what I have aforementioned can recognize that.  However I have recently come across several individuals and companies that do not know where to begin with market research, never even considered the impact of market research, or simply don't have the time.

That being said, I am happy to expand my services to those interested and while I am located 45 minutes south of Boston, MA many services can be completed remote. I have thoroughly enjoyed my work as an independent contractor in real estate/property management and would like to continue helping others get started.