How do You Select Your Target Real Estate Market Area?

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How do you select your target market area? This is a question that I am often asked within the blog comments and my goal with this post is to help demystify the process required to do so. It’s best to first take a step back and examine the bigger picture.  What are your goals, what sort of housing are you looking to invest in, what areas compliment your exit strategy of choice? Once you have this defined we can move to major market areas.

Related: Why & How New Investors Should Focus on Specific Target Markets

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Major Market Areas:

Break your market up into sections, whether you use cities, zip codes or even individual subdivisions. This will help you to target very specific niches within your local market. Again the boundaries you select should reflect your goals for investing.

Macro Variables:

Once you have defined the major markets you would like to participate in, we must then define macro variables. These are factors, from a proverbial 10,000 ft view, can help you identify trends and target specific housing product over large areas of the market place. A few of the key macro variables include:

Tax Assessed Value –

We will use tax assessed value as a gauge for what the property is worth. Although tax assessed value does not equate to market value, it serves its purpose in helping to define our target market areas. Perhaps you are looking for properties in a higher end subdivision to flip. Or you may be looking for rental units at or below the median value. You need to adjust accordingly and tax assessed value is the closest we can get without having to comp out individual houses.

Square Footage –

For a given housing unit, what square footage are you comfortable working with? Whether this number is 800 sq ft or 3,000 you need to know the range you are willing to work with.

Number of Beds Baths Garages –

Are you sticking to more conventional numbers for example a 3/2/2 or are you willing to invest in unusual layouts such as a 2/1 that might work as an owner financed property or rental? Whatever your answer factor this into your criteria.

Year Built –

Do you need newer construction post 1990, or are you willing to entertain older properties from 1960 and all the intricacies that come with it?

School Districts –

Are the schools in the area rated exemplary or poor?

Crime –

Often times you can pull data from the cities local police department or use heat maps provided by various online sources such as Trulia or Zillow.

Once you have established the “big picture” you can begin to target major market areas that suit your needs. You don’t have to stop here however, within these major market areas however you can go back through with a fine tooth comb and further refine your selection.

Related: How Do Real Estate Markets Differ and Which Should You Buy In?

Micro Variables:

Exterior Type – Some investors have a preference for example brick homes over frame.
Ratio of Absentee Owners to Owner Occupied – Within the Dallas-Fort Worth metroplex some neighborhoods have become saturated with rental properties. Many land lords I know would prefer to avoid this sort of subdivision makeup if possible. Absentee owner typically indicates the property is a rental whereas an owner occupied property indicates the person living in the home is the current owner of record.

Pool –

This is especially important if you are a land lord. Often times its a liability to keep a pool and often you will need to budget to fill it in. However, if you are looking for homes to flip a pool might very well be an asset.

A/C Type –

Does a property need to have central head and air for your to consider, or are you willing to consider window units?

Foundation Type –

Are you willing to purchase a home that is on pier and beam, or does it need to be on slab?

Driving Distance –

If you are a land lord this is often an over looked variable, until you start having to commute 45 minutes over the weekend to fix a problem. If you will be personally managing your own rental units, factor in the commute time.

These are just some ideas, there are many other factors you can include (or exclude) to help you with your analysis.

Where do you find this data?

Much of the data touched on in this blog post can be found from your local appraisal district. In addition you can utilize additional sources such as or MLS data if you have access to it. With all of this data combined you can paint and informed picture that will help you invest in areas specific to your needs. In addition, it will help to focus your marketing efforts as well.

In Conclusion:

Defining your own target market area is really an assessment of your personal needs, no matter your exit strategy. Use some of the ideas in this article to act as a spring board to help identify target markets within your area and feel free to add or remove additional variables as you see fit.  Thanks for reading and if you have any comments or questions please leave them in the comments below and I will do my best to address them.

Photo Credit: Ben Freedman

About Author

Chris Feltus

Chris is an active real estate investor who buys and flips houses in the Dallas real estate market. He enjoys helping others along on their journey. In addition, Chris operates as a licensed Realtor in the Dallas-Fort Worth area.


  1. Good article. There have been lots that detail the various refinements that CAN be made, but there is little to no guidance on what refinements SHOULD be made. I know this will depend on what you are looking for and your area, but how do you go about determining what you should be looking for and what is best in your area?

  2. Great article, Chris! You know a lot of investors completely overlooks this step all together. They find a house where the napkin math works out and then pull the trigger. Only later do they realize the math was good because the house was in a high crime area or finding tenants there is harder, etc.

    Keeping your strategy in mind is paramount as you go through this exercise. I used to own a pool and spa maintenance & repair company. Pools are huge cash flow killers for buy and hold investors, so glad to see you make that point.

    • Chris Feltus

      Thanks for the comments Sharon, much appreciated. Yes this is a very basic step and lays the entire foundation for your business, yet many overlook it all together. As you stated this can result in unintended consequences later down the road when they acquire property that does not fit their model. Just like anything else, its best to have a plan first.

  3. Kirsten Walstedt on

    I have not bought my first fix and flip yet, but I find myself gravitating to the same types of houses in the same neighborhoods and price ranges, so I think something in me is telling me what I want to target, even if I have not yet systematized it. This may or may not be a good criterion for choosing a house, but I find it is easier for me to know how to add value to a house that I could picture myself living in. The old 60s and older ranch houses here are a style that I find really depressing, so that I have trouble feeling excited or positive about even the ones in great condition. I.e., if I see a rundown one, I think, “Even if the floors, countertops, appliances, and bathrooms were redone it would still be a depressingly squat, flat crackerbox of a house.” And even though I know that some people like these houses, their taste is alien to me so I don’t think I would be good at fixing it up for their taste, if that makes any sense.

    I like 3/2s and 4/2s in specific Scottsdale and Phoenix neighborhoods that have tile roofs, between 7,000 and 13,000 lot sizes, vaulted living rooms, preferably a pool and are built no earlier than 1980. I can easily imagine every update and material I would use to restore these to top of the market value.

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