Market Research Insights

Here are some key takeaways from the book ABC's of Real Estate Investing by Ken McCelroy. 

1. Levels of Research:
1. Level 1 Research:
1. Finding markets suitable for rental properties.
2. Level 2 Research:
1. Face to Face/On The Ground from local area property managers, commercial brokers, lenders, city officials, investors, etc.
2. When meeting make sure to get all their best contacts then create a database and call and analyze.
3. Level 3 Research:
1. Follow up on leads given/referred, put all together to gain an accurate picture of the business environment.

1. Market Research:
1. Supply & Demand:
1. Supply:
1. Number of rental properties available in the market/submarket + future development.
2. Demand: (Number of people looking to rent)
1. Check the following:
1. Occupancy rates
2. Presence of “Move In Specials” to give people an incentive to move in = low demand (or bad property)
3. Other advertisements

1. Drivers of Supply:
1. Employment:
1. Population and residency follow employment.
2. Look for upward trends (new companies moving in, etc)
3. Look at how stable the employment base is (reputable companies, quality products, services that are growing in demand)
2. Population:
1. Place with a “living experience/Persona” draw population
2. Get info from city officials (*They work for you)
3. New roads, highways, developments, sports stadiums, arenas, universities/schools, casinos, military, company relocations
4. Resilience:
1. Not too dependent on any one company or source of employment or population driver.
2. Economic Diversity
5. Affordability:
1. Cost of home ownership far exceeds renting.

1. Location:
1. *Not based on geography alone but how it measures up to supply & demand*
2. Great Locations Have:
1. Drive by visibility: More people will see your apartment and for rent ads.
2. Rare Quality: Waterfront, etc
3. In Demand: You can afford property in hot locations + based on operational performance not sales price (financials).

1. Other Info:
1. Become an expert in your market/submarket:
1. *Use your research and keep it ongoing.
2. Read everything about the area both current and future.
3. Look around and take a hard look at the environment.
4. Listen/On The Ground details
5. Look at the tenant's
6. What kind of property/neighborhood
7. Always get last 12 months of financials