ELIMINATING MARKETS TO FOCUS ON A SPECIFIC MARKET TO INVEST IN

[Jason Malabute]

Hi Guys, 

Originally, I started looking into the following markets:

League City, TX

KATY, TX

TEXAS CITY,  TX 

PEARLAND, TX

NORMAN, OK

WINTER GARDEN, FL

BOERNE, TX 

It is too much to keep track of all these markets, so my goal is to cut down my markets to 3 markets this week. Then pick 1 market by December to invest in. I will purchase my first rental property in 1st quarter 2019. The markets above were chosen based on population growth, job growth, etc. 

I am only interested in 2-4 unit properties.   By far the Houston markets (League City, Katy, Texas City, and Pearland) has the strongest population growth. and job growth out all the markets mentioned above. The problem is they are all pretty suburban areas (There's not much multi-unit properties there). The only exception is Texas City. Texas City has a place called  "Chelsea" which has more multi-unit properties, but I heard it is a rough part of town and many businesses are moving out.  Renter percentage in these areas (except Texas City) are 24-27%. The average percentage of renters in USA is 32%. Moreover, most of the people living in these areas drive 30 minutes per day to downtown Houston and Houston Medical Center.  Therefore there is no actual economic anchor in the in the Houston markets mentioned above. Unlike, Norman (Oklahoma University is located here), Winter Garden (University of Central Florida is located here), and Boerne is a military area. All three had positive net migration numbers (Houston had negative net migration because of the hurricane/flooding in 2017).

Lastly, a lot are saying that Houston markets are already over saturated with investors,  the property prices are too high,  etc.

Since I am trying to narrow my market search in investing in a 2-4 unit property would you guys agree that I should eliminate the Houston markets above and focus on Norman OK, Winter Garden Fl, and Boerne TX?

[Joe Villeneuve]

OK. Now, what is the important information that goes into Market Analysis? You have mentioned a lot of fun facts, but nothing that I would use to analyze a market for REI.

In all these areas, what are numbers ($$$$) for the following important questions:

1 - What are the entry prices for the common square footages (ranges of similar comps)?
2 - What are the Days on Market for the different entry prices for each of the SQ Ftg Ranges?
3 - What are the Sold Comps for the Sq Ft Ranges established in Question #1?
4 - Based on the Entry Prices and Sold Comps in each Range, What is the typical Profit (Spread) that can be made in each Range?
5 - What do the Maps, plotting just the properties with the same ranges on it, look like?  Are properties that are profitable grouped together forming the micro-markets you are looking for?
6 - Using the same Ranges, what are the rents/sq ft in those same areas?
7 - What are the typical expenses?
8 - What are the typical cash flows?
9 - What do the maps (same ranges) of rental properties look like?
10 - Are there groups of good positive CF rental comps forming rental micro-markets?