Learning My market: Master Plan or Recipe for Disaster?

7 Replies

BP Community,

I am beginning my journey to master my local marketplace and would like some constructive feedback on my strategy. 

1. Find one to two territories with large volumes of recent cash purchases (90 days)

2. Research those areas and examine the comps of the properties paid with cash

3. Reach out to cash buyers in those neighborhoods and determine their buying criteria

Anything that needs to be changed, added/subtracted to my current process?

@Shaun Caldwell  

What is your target strategy?  It would appear as though you are looking to Wholesale.  Is that accurate?  If so, I would recommend an adjustment in your strategy.

1.  Great!  Do that.

3.  Perfect.  Do that too.

2.  Instead of spending your time analyzing comps in an area already saturated with investors, I would figure out what makes that area attractive.  (Hint...It's likely quality schools & proximity to employment opportunities.)  Once you've completed #3, you combine it with what made those areas attractive and then find those properties in similar areas with a lot less investor pressure.

Just my 2 cents, but I don't like to fish in the middle of a pond, where a bass tournament is happening!  ;0

Originally posted by @Hattie Dizmond:

@Shaun Caldwell 

What is your target strategy?  It would appear as though you are looking to Wholesale.  Is that accurate?  If so, I would recommend an adjustment in your strategy.

1.  Great!  Do that.

3.  Perfect.  Do that too.

2.  Instead of spending your time analyzing comps in an area already saturated with investors, I would figure out what makes that area attractive.  (Hint...It's likely quality schools & proximity to employment opportunities.)  Once you've completed #3, you combine it with what made those areas attractive and then find those properties in similar areas with a lot less investor pressure.

Just my 2 cents, but I don't like to fish in the middle of a pond, where a bass tournament is happening!  ;0

Yes, Hattie you are correct. I am starting out as a wholesaler. It's really encouraging to know that I was approaching this plan the right way. Thanks for your feedback! To your point, the assets within the community are truly what make it thrive. It really does make a difference. Great way to think about things! I read something yesterday that said it's best to be in front of trends and emerging markets opposed to existing ones which can be oversaturated with investor activity. Based on your response I am going to venture to say you agree to some extent.

@Shaun Caldwell  I absolutely agree!  The first thing I did was to pull cash sales & look elsewhere!

I lived in Charlotte for 4.5 years.  Just moved back to Texas in 2011.  There are some really nice, reasonable priced areas Charlotte.

Originally posted by @Hattie Dizmond:

@Shaun Caldwell I absolutely agree!  The first thing I did was to pull cash sales & look elsewhere!

I lived in Charlotte for 4.5 years.  Just moved back to Texas in 2011.  There are some really nice, reasonable priced areas Charlotte.

 Sounds like a solid plan Hattie! Thanks again for your feedback!

@Shaun Caldwell

Shaun,

I would revise your approach a bit...

Step 1: Read every decent real estate investment book you can get your hands on.  Learn as much as possible about market research, market cycles, team building, investment analysis, financing, negotiations, acquisitions, property management, etc...

Step 2: Locate experience real estate investors who are willing to mentor you.  Checkout real estate investor groups (you're already doing this).  Learn from them.

Step 3: Tour your neighborhood and look at properties...  Call real estate brokers in markets you're considering and ask them about trends they're seeing.  Start to visualize how you can take what you're learning from books and other investors and take action!

Step 4: Once you're confident that you've read enough material, gathered enough information, have a solid network of potential partners, and can see in your mind how you will use this information.... you will have gathered the emotional support needed to...TAKE ACTION!

This is a process that most people use to learn something new and get comfortable taking new risk.  I have used it personally over and over again.

One of the best books to get you started is this one:

http://www.amazon.com/Turned-Three-Million-Estate-...

It includes a practical, step-buy-step methodology you used to pyramid your money and build long-term wealth.  Best of luck!

Originally posted by @Jon Strishak:

@Shaun Caldwell

Shaun,

I would revise your approach a bit...

Step 1: Read every decent real estate investment book you can get your hands on.  Learn as much as possible about market research, market cycles, team building, investment analysis, financing, negotiations, acquisitions, property management, etc...

Step 2: Locate experience real estate investors who are willing to mentor you.  Checkout real estate investor groups (you're already doing this).  Learn from them.

Step 3: Tour your neighborhood and look at properties...  Call real estate brokers in markets you're considering and ask them about trends they're seeing.  Start to visualize how you can take what you're learning from books and other investors and take action!

Step 4: Once you're confident that you've read enough material, gathered enough information, have a solid network of potential partners, and can see in your mind how you will use this information.... you will have gathered the emotional support needed to...TAKE ACTION!

This is a process that most people use to learn something new and get comfortable taking new risk.  I have used it personally over and over again.

One of the best books to get you started is this one:

http://www.amazon.com/Turned-Three-Million-Estate-...

It includes a practical, step-buy-step methodology you used to pyramid your money and build long-term wealth.  Best of luck!

 Thanks Jon! Sound advice in particular Step 1. In depth knowledge of one's market is something that often gets overlooked especially by beginner wholesalers and investors. It makes the wholesaler more attractive to work with by giving buyers, sellers, and partners confidence that you're competent and able to negotiate win-win deals. The marketing and mechanics of deals are technical and draw off emotion which are things that can taught in my opinion easier than market research. BTW, thanks for the book recommendation! I have bookmarketed if for later review. 

@Shaun Caldwell  

Locate and attend 3 different local REIA club meetings great place to meet people gather resources and info. Here you will meet wholesalers who provide deals and rehabbers. You will also get some good intel on the local areas.

To find out about an area 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.

Good Luck

Paul 

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