How to choose an area to invest in

5 Replies

Hi all,

my name is Tsahi and i am new here. really exited about this website.

I do not live in the U.S.A and from the prodcasts i have heared so far 2 question popped to my head:

1. I don't know america, the countries, the cities ect. so how am i supposed to define a specific area to focus is?

i mean, i know that that this are needs to have certain parameters that are important for me as an investor, but your counry is  H U G  E,

how can i even start looking, how can a make a filter or use profiling charachteristics that will help me to choose a specific location?

2.Iv'e been hearing a lot of sentences like "you have to look at 50-100 houses before you buy" and "only if you are looking inside the house you can eventually estimate the real value" and so forth. now, this sentences are very logical and seems true, but as for now i am not in the position to do that sort of stuff. i have to trust indise guys that will help me, and to be totaly dependent of them. and advise how can i overcome this obstacle?

Thanks for reading this, i hope my grammer is right:)

@Isaac Geller Just like you I am out of state investor not in favorable condition to visit the properties. I work with turn key companies, manage properties with PM but as well do lots of homework on whom to work vs whom not to. Yes you are right you need to do lot of analysis before you have your hands down on something.

@Isaac Geller The U.S. is divided in to what is called Metropolitan Statistical Areas (MSA's). There are roughly 350 of them. I recommend starting by identifying a handful of MSA's with strong population and job growth. Look for diverse and growing economies with a broad employment base. You can find most of this information through the U.S. Census Bureau and Dept of Labor Statistics. Once you'd identified a market with good economic and demographic fundamentals, drill down and start looking at markets with high rent/price ratio's, favorable property taxes and homeowners insurance rates and favorable landlort/tenant laws. Being that you are outside of the country you may want to go the turn key route. If so, look for markets with well established , reputable turn key companies There are several good cash flow markets. Personally I like Indianapolis and Kansas City a lot. Both offer strong cash flow ROI and have growing populations and jobs.

Thanks a lot. Mike your advice is awsome, i will definetly use it. 

The reality for you is that it's not going to just be about what market is the best one to invest in. It's going to be that PLUS where you can find the best teams to work your property. A fantastic market won't help you any if there isn't a solid team there. Bad team = tanks your investment. So you need a combination of a good market plus a good team, in my opinion. 

That kind of further complicates it, but something to keep in mind.

This article is specific to turnkeys, but even if you don't go the turnkey route, the same ideas apply to you creating your own team in any particular market-

Hope that helps!

Can you qualify for a loan in the US? If so, you have various options available. If not, you may have limited options.

Turnkey is good if you can find the right operator. Being an investor in a large apartment deal is another option. Purchasing a property and hiring your own PM is a 3rd.

Finding the right market comes down to your plan. A good market for someone buying a 200 unit apartment building is not going to be the same as the person looking for turnkey rentals. If you're not going to be hands on, your best bet is to find a market with strong economic indicators and the best team possible. There are a ton of resources available for multifamily such as IRR and Marcus and Millichap reports on market data to help you learn about different markets. I'm sure similar reports exist for single family.

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