Hey BP Community,
I was wondering how you choose your niches and strategies. What is the best way to make that decision? Do you look at what makes the most sense in your market? If so, how exactly would you go about doing that? Do you find out what your goals are? For example, If you are aiming for cash flow, do buy and hold.
Two factors come into play here, your market and you personally. Choosing a strategy and a niche inside that strategy require you to study and analyze each of these factors. The three biggest and most popular strategies are buy and hold, rehab flip, and wholesale. Studying your market to see if buy and hold is practical requires some simple math. What is the average cost of the average size home in the rental market cost and how much rent does that get. In so cal, as an example, a 1500 3 bed 2 bath would run $300k plus in outskirts of the city and the rents would be around $2100. That is below a 1% monthly rent to price ratio which will equate to negative cash flow. So being from so cal, that strategy for me would be out (unless I wanted that strategy and simply looked for a market that supported cash flow like TX). Rehab flip can be done in most markets, however conditions of current markets must be factored. You certainly did not want to be flipping in Ca in 2007 as the market was crashing down.
As to "you" what are you good at, what are your likes, dislikes, strengths, weaknesses, etc. Then pick a strategy and niche that fits your likes and strengths.
Have you checked out the Ultimate Beginners Guide? Maybe that could help you with a few questions.
I'm from the old school. Niches are somewhere to focus but the most active niches often change from time to time. I am a believer in having a large well equipped tool box and when I meet a prospect I ask myself what is the best tool to use in this deal. It goes along with the old saying that if all you have is a hammer, everything will look like a nail.
As @Sharon Vornholt says, "Sometimes your niche chooses you." This is definitely the case in my experience. Though, I had to go through a lot to see what worked and what did not work for me. Experience does come into play when eventually settling on a niche.
Hope that helps!
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