Check the demographics.

However, since it is generally expected that newer buildings will have higher rents than older buildings, and high quality tenants will pay more for nicer space then a fledgling business would pay Cap rates are expected to be lower in new construction properties, and high quality assets, like high rises in urban areas.You can extrapolate that further and make generalizations about geographic areas, saying that a certain neighborhood is known for better quality buildings and therefore might have a lower cap rate overall than the neighborhood one zip code over.Analyzing details about income and expenses, tenant quality, and demographics about the property neighborhood are more important than analyzing cap rate, in my opinion.The cap rate is a valuable tool to compare two like income producing properties.Hope that helps.

First off, you need to do your demographic studies on the area to make sure it is the right place to invest right now, or has a strong potential for future growth.Once the area checks out, you need to have a very good understaning og the rental rates (not just the opinion of one or two PM companies), know the market price for homes (break this down to price per square as well), and know the current inventory, past inventory, and all other pertinent information which can be gathered from the MLS.Doing complete rehabs from afar is very tuff to do.

So far I've completed the demographics of the area, I've gotten a feel for the rental market and I've gotten my contractors to view the site with me.

Demographic numbers continue to be strong as well.

@Scott Mac doesn’t matter ultimately if they are men are women, but Lets just imagine a typical Boston renting 20-something pair of young women working in a nearby hospital renting their first apartment—prime demographic here—would they consider it a plus for renting?

Is there a block captain - they know the area and residents and can be an awesome resource.Buy in areas that attract homeowners vs renters (conduct demographic research for percentage of each).

Not only are they good cash flow markets but they also have solid economic/demographic trends which many markets don't.

We moved between comparable cities so its not like we jumped demographics or cost of living by a lot, though CoL in WA was more expensive than VA.If property taxes are whats killing you then move out of the big cities or start a cue de ta and take over the Seattle government.

You might want to add Kansas City to your radar, it's very similar to Indy in terms of economic and demographic trends and cash flows very well.