Knowing your market?

Question

I'm a total real estate newbie starting out in wholesaling, and one of the most common pieces of advice I see is to "know your market."  In general, that seems like obvious advice.  You do need to know what is happening in your market in order to find deals, find cash buyers, and be competitive.  However, in practicality, what are some of the most important pieces of information that you guys have found that are necessary to truly "know your market"?  I.E., what information is most important to research when trying to learn your market?

Judah Hoover · Answer

@Josh Caldwell and @Chris Music offer great advice. I would add a few steps to put into practice.

1) Join, attend, and become involved with your local REIA club

2) Call every bandit sign you see... "what are you doing? where are you buying? what are you looking for? what areas are you avoiding? Why, why why? Tell me more". Local investors, for some strange reason, are VERY willing to help other investors.

3) Walk 100 houses in your market. not 50 not 95... walk 100 houses. Houses for rent, houses for sale, houses in all stages of completion and in any condition. I am not talking about parade of homes houses... houses out of your price range. Walk 100 houses of they type, price range, and in areas you will likely be doing.

Chris Music · Answer

Chris, welcome! Great question. helpful information to know about your market includes: median prices, median price/sqft, average days on market, months of existing inventory, distressed sales prices vs rehabbed sales prices, cost for repairs in your area, typical finishes and materials in your area, etc.

You can reach out to agents and contractors and/or do research online on the various real estate sites.

Josh Caldwell · Answer

@judah hoover how on earth did I fail to mention going to your local REIA, I run the REIA in Pittsburgh.  I am ashamed that I missed that bit of advice, but thank you for mentioning it

Josh Caldwell · Answer

I agree with @Chris Music he pretty much nailed it.  I would add that I need to know which areas are trending up and which are trending down.  I also want to know where people rent and where people flip houses.  Part of knowing your market is being able to understand your deal structure coming in and your exit strategy.  I tell all new investors to use an option contract as much as they can.  The option give your the ability but not the obligation to close on a property.  that way if you totally screw up, you dont have to suffer for it.

To your success

Josh

PS feel free to connect with me on BP

Marlon Wilson · Answer

Hi @Chris Eaton!

Welcome to biggerpockets group! Wishing you success on your real estate investments!

Chris Eaton · Answer

@Judah Hoover@Josh Caldwell

I did a quick search online and found my local REIA club, so I plan to start attending those meetings and get active there right away!  Thanks for all the tips!

Chris Eaton · Answer

Thanks to everyone for all the great advice!  I've definitely got a lot to get started on here!

Paul Timmins · Answer

@Chris Eaton

Check out the local landlord association meetings.

To find out about an area go to IREM.org search for ARM certified property managers. Call 5 ask them what parts of the city they like/dislike and why. Ask them what they see expenses running per category per unit. What do they see them selling for per unit, what is the market occupancy rate. What are the market rents? Ask them if they know anything coming up for sale. Great way to pick up some good info and possibly a deal.

You can also search NARPM.org for the RMP (Residential Management Professional) and MPM (Master Property Manager) certified.

Paul

Chris Eaton · Answer

@Marlon Wilson Thanks!

Johanna I. · Answer

I just want to say thank you, this information help me too.

Knowing your market?

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