The Complete Guide to Finding the Best Market to Invest In

Every day, I see investors asking the same broad question: what market is the best to invest in? And while David Greene has an entire book on long distance real estate investing (which is incredible by the way), so many people continue to fall into a cycle of overthinking, overcomplicating, and overanalyzing the surface level of various markets before digging any deeper.

So in order to avoid the classic "analysis paralysis", I have formulated a simple, a step-by-step guide to finding a great market and taking a step forward towards major action. For starts, I have found it best to take some time to REALLY narrow down your REI goals, and then do some research from there.

Here are my 5 steps to finding and mastering a great market:

1) Figure out what exactly it is that you are trying to achieve with REI and write it down.
For example, my personal REI goal is to achieve FIRE (financial independence, retire early). Because of this, I am focused primarily on cash flowing markets such as Columbus, OH. However other investors may be looking to find a rapidly growing market with lots of appreciation potential, designed to really grow their wealth over time. Some others may be looking for a place with short term rental potential, or even a niche to get into a certain kind of commercial real estate. The moral of point #1 is that every investor has different goals, and therefore, you should look to match a market to your own goals and nobody else's. 

2) Find your niche in the market that will propel you towards your goals.
For this step, take your time and research the best outlet for you to achieve your REI goals. There are long term SFR's, STR's, small residential (2-4 unit) multifamily properties, small commercial (5-20ish unit) properties, large commercial, mobile homes, mobile home parks, industrial properties, retail properties, storage units, garages, and so many other options to choose from. It is important to do you research and find a niche that benefits both you and your business.

3) Spend a good couple hours on Google to find maybe 4-5 markets that match your criteria.
This step will take some time. At this point in the process, you should have clear goals and clear criteria for what you are looking for in a market. This is the point where you can get into the good stuff: the actual market search. There are so many resources that you can use to find markets that match your criteria. For BiggerPockets Pro members, I highly recommend utilizing the BPInsights page. This page is where tons of BP data analysts compile their research on various markets and do a lot of the heavy lifting for you. Once you have browsed some of their articles, head to Google and spend some serious time on there digging through blogs, videos, forums, etc. You should be able to identify about 4-5 markets that hold great potential for your REI future.

4) Dig into specific neighborhoods and find out crime rates, school zones, walking distances to places, etc. You can also find average rents for various housing layouts for each neighborhood and determine the price-to-rent ratio for each area.
This is the step in which most new investors tend to ignore. "Knowing" markets as a whole is like looking at mining cave. You wont be able to discover the gems if you don't dig in deeper. In terms of a single market, even knowledge from one zip code to the next is far too large to stop at. It is important to dig into individual neighborhoods to understand crime rates, school zones, walking distances, etc. Some incredible (but paid) services to dig into these figures are BPInsights, RentFaxPro, and PropStream. Each of these resources sorts through and compiles data from a plethora of sources to help you make the most informed analysis of any given area. If, on the other hand, you are just getting started and need free (and admittedly not as strong) resources, be sure to check out ADT's Crime Maps, GreatSchool's district map, and WalkScore to narrow down your market's local statistics.

5) Finally, once you have established a few areas that you may see fit for your PERSONAL goals, it's all about networking. 
You're almost there! By now, you should have defined your goals, determined what strategy fits them, discovered a few markets, and narrowed down the market statistics. Now all that's left is... the most important part. Yep, you heard it here first folks! The most important part to picking your market is networking. Luckily, this part can be the easiest and the most rewarding in the long run. Here is my advice on how to go about it. First, go on BiggerPockets and find some local investors to your market. Make sure to have a HUMAN conversation and don't waste their time. See if there is any chance that they'd be able to hop on a quick call and then make it worthwhile for them. Have questions ready and offer to help them in any way if they so need it. Next, it is time to reach out to what David Greene coined, the "Core 4". These four professionals will consist of agents, lenders, contractors, and property managers (all of which will be essential down the line, so start to build rapport now). Try to dig into their perspective's on the market and its various pros and cons. Find out what investing is REALLY like there from professionals who actively do business in your desired market.

Congrats! Once you’ve done all this, you should have a good understanding of what exactly you are looking for and where might be a good fit for YOU. Just to reiterate what I was saying before, the major problem with asking everyone about what market to invest in is that it really depends on what matches YOUR goals. You could be hearing about a market that works fantastic for one investor, but their goals and situation will never exactly match yours. I recommend putting in some hours to narrow down what it is you want and going from there.

I really hope this guide was helpful and as always, feel free to connect and reach out if you have any other questions! Good luck and happy investing!