I am in the first stage of investing which is choosing a location to invest in. I am looking at cities within an hour drive of my home in Oxford, OH.I'll be looking for lower priced single family homes that need some TLC.
A lot of the beginner books talk about local markets but they're not very specific on actionable steps in the research department. I'd like to know what methods you use to determine whether or not an area is worth investing in.
As always thank you for your insight!
To find out about a local market go to IREM.org search for ARM certified property managers. Call 5 ask them what parts of the city they like/dislike and why. Ask them what they see expenses running per category per unit. What do they see them selling for per unit, what is the market occupancy rate. What are the market rents? Ask them if they know anything coming up for sale. Great way to pick up some good info and possibly a deal.
Updated over 4 years ago
@Paul Timmins Thanks Paul! When you say per category per unit, do you mean categories like maintenance, insurance, taxes, etc?
I really like the idea of utilizing property management companies. My problem is that I haven't narrowed it down to a city yet. Being in Southwest, OH there are several cities Cincinnati through Dayton that have potential and I'm just not sure how to size them up against each other.
@Mark Severino Thanks for the resources, are there any points of data you like to look for specifically?
Things I would look for are overall market trends:
+Positive population growth +Strong economics(jobs) +Employment diversity +Government support for local companies through tax incentives + Strong government representative +Crime rates
Things like that to get the big picture elements. From there then go to the more specific factors:
Time on market, housing stock, rent vs buy, school district ratings, foreclosures, rent ranges ect.
As it sounds like you are a relatively new investor, I would highly recommend that you concentrate on your local area. You are in a better position to know what are the best neighborhoods to buy in. You may also know of transitional areas that could have a great potential for future income.
Though the returns may not be as high as moving to a "superior" city or area, it will be a great way to get your feet wet with less risk and the expense of running back and forth to take care of your investment.
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