How to Choose an Out of State Market

Question

I live in Orange County, California and am looking to begin investing out of state. I'm trying to stay away from the "HOT" areas. Any suggestions as to how to research various out of state markets? Demographics, job trends, etc?

Mitch Messer · Answer

Hi @Mike Doyle! Finding the next HOT market before the crowds show up is the Holy Grail of forecasting, of course. It's more art than science, but here are some considerations:

• Landlording Climate - I'm a buy-and-holder, so I'm looking for markets that are landlord-friendly. I want, among other things, zero unnecessary regulation and a fast and cheap eviction process. So, yes to states like Georgia and Ohio, and no to places like Vermont and Oregon.
• Market Growth - Our properties are generally aimed a working-class families. So, I want to see that folks like this are flowing into the target market, and not out. I've learned to be careful with aggregate demographic data: If most of the population influx is retirees, for example, that might not help me. I want to see the data broken down by age group.
• Market Size - Even when there is plenty of growth, I also want markets with a sizeable total population. Tiny markets, even fast-growing ones, are just more volatile and subject to disruption from unexpected changes. I don't want one plant closing to wipe out my entire portfolio.

Kyle Mitchell · Answer

Hi @Mike Doyle you can always contact the Economic Development offices of each city, they will provide you with information on current and future plans for the city. Also check out reports from IRR (Integra Realty Resources) and the Milken Best Cities Report (you can google this). Other good sites to check out demographics are City-data.com and census.gov. Since you are located in the OC, I also want to let you know that I host a meetup in Long Beach that focus' on out of state apartment investing. If you're interested PM me and I can tell you more about it.

Tom Shallcross · Answer

@Mike Doyle - I agree with all the great points above. An additional site to consider is areavibes.com. This site gives a general sense of cities, zip codes, and even specific neighborhoods within larger cities. This should not be a rule-of-thumb, but a good first stop to give you an idea of demographics, net migration, economic opportunity, median rent, median purchase price, owner/renter %....etc. It also provides overall rating of different aspects of the neighborhood which you can compare to other neighborhoods.

Dan Handford · Answer

@Mike Doyle This is a great resource to use when researching markets: https://factfinder.census.gov/faces/nav/jsf/pages/index.xhtml

Mike G. · Answer

@Mike Doyle Mitch brings up some excellent points. In addition browse around the BP hallways and look in the forums and it wont take long to figure out what spots folks are talking about.

@Mitch Messer great points mitch lots of good info there on selecting the right out of state market.

Also you can check this article out as well. Out Of State Investing

Hope that helps

Scott Morongell · Answer

@Mike Doyle I just went through this process. Willing to hop on a call and share my results with you. Depending on what size of deals your looking at can also play a big factor into market.

Jay Hinrichs · Answer

Oregon is not bad on evictions... now city of Portland has a quasi rent control measure but the rest of Oregon is not much different than any other market and its not like CA for sure.

Mike Doyle · Answer

Thanks everyone!!!

How to Choose an Out of State Market

How to Choose an Out of State Market

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