Out of town investment - metrics for new market research

7 Replies

Hello. We've been investing in our local market for several years now and are looking to diversify our portfolio. We are starting to research other markets, which feels daunting considering ‘any' market could be a potential market. We are starting to pull market condition numbers like employment rate change, vacancy rates, income rate change, etc. as the first pass before diving deep into a city to look at specific neighborhood data. Of course we could search on google for "what are the top real estate investment markets in 2020", but that's too ubiquitous. So I'm curious what other market metrics you would recommend looking at for high level market opportunity research. Thank you.

Some things are easy, do you want properties in AK or HI if not take those off the list?  If you are in the sun belt do you want to deal with the freeze thaw cycle?  Do you have a price cap in terms of dollars?  You can work backwards to the cities you want.  I think the tough thing is knowing the intricacies of different states when it comes to insurance, property taxes, local management fee customs etc.

I may be biased but southeastern Wisconsin is a very hot market at the moment. Janesville and Beloit were hit pretty hard during the recession as the General Motors Plant backed out and left the area. The area has seen a major turn around in recent years, while ABC Supply CO and Amazon have expanded into the area and quite a bit of money has been invested back into the community here. Dollar General and other businesses are also moving here as well. The economic growth, coupled with the prices in a good spot right now allow for it to be a great investor buy with tons of room for growth.

I highly recommend utilizing Neal Bawa's Real Estate Trends spreadsheet.  Great way to analyze markets based on key metrics that you should look out for.  He has a video to walk you through how to use it, and it's free! Looks at both a city level, and neighborhood insight.  It takes some time, but worth it as you will be able to narrow it down, or at least should be able to.  Here's the link:  https://multifamilyu.lpages.co...

Hope this helps!

@Bowen Taylor Payson

I always look at demographics. I find answering the simple question of whether or not the town, city or location is growing or not, then looking at the rate and the trend to be very powerful. I will not invest in towns that are shrinking- full stop.

@Bowen Taylor Payson

The method you are employing is great! 

Seems like you have a good grasp on market research, nonetheless here are a few metrics you can add to your search:

 - rental vacancy rate 

 - homeowner vacancy rate 

 - poverty rate

- education attainment rate (high school/GED & Bachelors)  

- number of housing unit

- household income

- rent to income ratio

- rent to price ratio

- population on SNAPS (supplemental nutrition assistance program) percentage 

 - prop tax rate 

- median age of buildings

- number of structures by units (SFR, duplex, tri, quad, etc...)

- median rents by number of bedrooms in unit


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