Analysis Paralysis - Selecting a first long distance market

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Analysis Paralysis - Selecting a first long distance market

Matt Caresco
Developer · Bend, OR · Member since 2021 · 10 posts · 12 votes

The California exodus to places like ID, MT, TX, etc. have generated a ton of interest in Californians investing in other markets. 

What are the best ways to make a market selection as a starting point for a new investor? 

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Lee RipmaPro Member
Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
5y

@Matt Caresco

I had this same issue. I live in CA and didn't know what market to pick. If you listen to my podcast I talk about how I just googled the top 10 cash flowing markets and picked one. I happened to pick a great one, Kansas City (mostly MO side but I'm in KS as well). It got me thinking about what makes good markets - still affordable but with population growth. 

I really dove into the data and I'm actually launching a software product called VestMap that allows RE investors to quickly look at the 7 location factors I think are important for any address in the US. Think of it as rentometer for location data. I recently did a large meta-analysis of the whole US by zip code (using geospatial methodology). Here are the 16 markets that I like based on that analysis. Feel free to email me for a link to the whole article (will be a blog post on VestMap.com when I launch) for detailed methodology. Too long to post here. 


Austin, TX

Dallas, TX

Fort Worth, TX

Houston, TX

San Antonio, TX

Charlotte, NC

Columbus, OH

Kansas City, MO

Las Vegas, NV

Mesa, AZ

Phoenix, AZ

Miami, FL

Jacksonville, FL

Orlando, FL

Oklahoma City, OK

Omaha, NE

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  • Felicia Feliciano
    Member since 2021 · 41 posts · 14 votes
    5y

    First find out which market has doubled or tripled the last 10 years.  The rest dont even bother.

    Of those that have had massive increases ask your self if you are OK breaking even after a 30% down payment.

    Then roll the dice, baby needs a new pair of Air Jordans.

    2Reply
  • Tesho Akindele
    Rental Property Investor · Orlando, FL · Member since 2016 · 135 posts · 145 votes
    5y

    @Matt Carruesco make sure you find a place that has a growing population. If you’re planning to hold for the long term that’s very important!

    Also, don’t get too caught up in picking the “perfect” market. People are successful in many different markets. Finding a good team is just as important as picking a great market.

    2Reply
  • Erik B.
    Rental Property Investor · Amityville, NY · Member since 2018 · 351 posts · 441 votes
    5y

    @Matt Carruesco

    I'm having a hard time picking a place as well. Everytime I think I'm getting close something about the area gives me doubt. I've been looking in the Midwest for cash flow and landlord friendly. Many of the places where the numbers work the crime rates seem high.

    2Reply
  • Marc RiceBusiness Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
    5y

    @Matt Carruesco @Erik B. The Midwest is great for cash flow and many markets within also come with a lot of appreciation. There are also a lot of markets that have no appreciation and a declining population. In strong markets such as Columbus, Ohio you’ll find deals around the 1% rule and can do closer to 1.5% rule in C class neighborhoods. In A class neighborhoods here though it’s very competitive with 5-6% cap rates.

    Overall wherever you invest it’s important to have a great local team of a realtor, property manager, contractor, and lender.

    [email protected]614-363-2787
    Marc Rice | Investor Friendly Agent at Reafco Tailwind Team574 Reviews
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    4Reply
  • Tina Tsysh
    New to Real Estate · Orange County, CA · Member since 2020 · 214 posts · 184 votes
    5y

    Make sure you listen to BP Real Estate episode 384 where Spencer is telling a story of how he invested out of state and lost $60k because things quickly got out of hand. Before thinking which markets to invest in, you have to ask yourself if you are okay with losing money in case things don't go as planned. When you invest in a market where you don't live / don't have people that you know, the rehab process can become a complete disaster. If you are not there to monitor the work, things can quickly get out of hand like they did in Spencer's case. 

    On the other hand if your job allows you to work remotely or travel often, or if you have family / friends in a certain market, investing out of state can work. 

    First places that I think of where to invest are Phoenix AZ, Nashville TN, Austin TX, Miami FL, Denver CO. However, don't forget that investing in a good market doesn't guarantee that you will make money and investing in not so good of a market (LA for example) doesn't mean you won't make money. 

    At the end of the day, it is all about how much risk you are willing to take and what your long-term vision is. 

    Good luck! 

    5Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    5y
    Originally posted by @Matt Caresco:

    The California exodus to places like ID, MT, TX, etc. have generated a ton of interest in Californians investing in other markets. 

    What are the best ways to make a market selection as a starting point for a new investor? 

    It does not matter where you start as long as you develop your Core 4. The core 4 is David Greene’s strategy for long-distance and made up of a realtor, contractor, property manager, and lender. Once you have this team in place, you should be able to confidently invest in any market.

    As for picking a specific market - I would go after one with an increasing job and population growth. I invest and work in Columbus, Ohio.

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
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    1Reply
  • Ronnie Galindo
    Realtor · Napa, CA · Member since 2018 · 112 posts · 77 votes
    5y

    @Matt Caresco and @Erik B., I had the hardest time picking as well. My wife and I went back and fourth on markets and finally decided with the help from BP. So what we did is since Matt, you are a pro member, we went to the webinar archives and watched the video "how to use BP to select your market." It showed us how to use BP insights to see everything thats going on with markets. Then we ran numbers on pop growth and job growth as well as vacancies and median house prices (had to be affordable for us). We are playing it safe and looking at Houston and Columbus where the entry point is lower so we can get into the market with far less than here in the Bay Area. Overall, it will depend as well on what your goals are. If you want just appreciation then there are markets for that, if you want straight cash flow, there are markets for that as well. You can get both too! just depends. You don't necessarily need people you know personally on the ground there (it does help tremendously though). By doing what @Remington Lyman suggested from David Greene's book, developing your Core 4 will be the money maker. If you have not read David Greene's book on out of state investing, buy it and take the time to read it! Its great and will be helpful. Lastly, reach out to people, network, and just jump in. We learn well from positive experiences but learn best for the negative ones. Make mistakes, learn from them, and never give up!

    3Reply
  • Dan BurstainBusiness Member
    Real Estate Agent · Austin, TX · Member since 2014 · 360 posts · 331 votes
    5y

    Follow the money and the job.  Austin is growing 150 people per day.  Apple, Tesla, Amazon, Oracle, and many others all spending billions of dollars here to build new facilities.  Happy to hop on a call to discuss the market.  Safest place to invest as well with the largest price drop in Austin's history was 2.9% (1.9% in housing crisis).  

    [email protected]512-588-3260
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    1Reply
  • J Zev J.
    CPA · Colorado Springs, CO · Member since 2016 · 413 posts · 258 votes
    5y

    Markets are constantly changing, and there isn't a perfect one. I think you should list your top 3 criteria (eg appreciation, low crime, good schools, etc) that you want in your market and your top 3 criteria (eg high crime, low returns, high property taxes etc) that you refuse to invest in. Start a spreadsheet and then look at 50 potential markets and rank them based on each of your criteria. See which markets you can narrow down through this method, weigh the pros and cons of the finalists, and then pick a winner. Commit to build your team there, invest there for at least a year, and then reassess the markets again after a year of investing there. Every investor has different criteria that will attract them or repel them from a market so really think about the criteria that is most important to you.

    2Reply
  • Zeke ListonBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2018 · 1k+ posts · 1k+ votes
    5y
    Originally posted by @Matt Caresco:

    The California exodus to places like ID, MT, TX, etc. have generated a ton of interest in Californians investing in other markets. 

    What are the best ways to make a market selection as a starting point for a new investor? 

    Hi Matt, I would take a good look at the population and development trends in the markets you're considering. I would check out Columbus, OH. 

    [email protected]614-665-5793
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    2Reply
  • Luis Cruz
    New to Real Estate · Los Angeles, CA · Member since 2020 · 34 posts · 52 votes
    5y

    @Matt Caresco it starts with your goals and what you're looking to achieve. Every single market has a real estate strategy that works for it, though they might not match with what you're working towards.

    I've been doing the same thing and used the following quant data;

    • Population growth
    • Job growth
    • YoY Rent growth (AGR, 3+ years)
    • YoY Price Appreciation (AGR, 3+ years)
    • Rent to Price Ratio
    • Rent to Income Ratio
    • Diversified economy (not relying on one industry)
    • Housing provider friendly laws

    Those will all be median numbers but give a good starting point before focussing in on specific neighborhoods.

    Subjectively then ask yourself what will your competitive advantage be? "Why am I going to be better than someone else in that market?"

    Most of this data is available online, BP insights also offers a lot of the raw data, Dave Meyers who is part of it was also on a couple of podcasts which I'd recommend (BP Podcast 186, Rookie Podcast 16)

    4Reply
  • Lee RipmaPro Member
    Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
    5y

    @Matt Caresco

    I had this same issue. I live in CA and didn't know what market to pick. If you listen to my podcast I talk about how I just googled the top 10 cash flowing markets and picked one. I happened to pick a great one, Kansas City (mostly MO side but I'm in KS as well). It got me thinking about what makes good markets - still affordable but with population growth. 

    I really dove into the data and I'm actually launching a software product called VestMap that allows RE investors to quickly look at the 7 location factors I think are important for any address in the US. Think of it as rentometer for location data. I recently did a large meta-analysis of the whole US by zip code (using geospatial methodology). Here are the 16 markets that I like based on that analysis. Feel free to email me for a link to the whole article (will be a blog post on VestMap.com when I launch) for detailed methodology. Too long to post here. 


    Austin, TX

    Dallas, TX

    Fort Worth, TX

    Houston, TX

    San Antonio, TX

    Charlotte, NC

    Columbus, OH

    Kansas City, MO

    Las Vegas, NV

    Mesa, AZ

    Phoenix, AZ

    Miami, FL

    Jacksonville, FL

    Orlando, FL

    Oklahoma City, OK

    Omaha, NE

    Podcast Guest on Show #373
    8Reply
  • Ola Dantis
    Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
    5y

    @Matt Caresco Who can blame Californians moving to places like TX?!!! Especially right now that many can simply work from home or work from anywhere else in the country. 

    Choosing a market depends somewhat on your strategy. For instance, there are many OOS investors flocking to the OH markets for turnkey type investments while others interested in passive income from syndication like the sunbelt states such as TX markets.  

    For any market you choose, there is always a reason why you should not invest in that market. Analysis Paralysis in action!

    The key is take to action anyways!

    3Reply
  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    5y

    Kansas City is a strong market

    1Reply
  • Ivy SanmiguelPro Member
    Real Estate Agent · Miami, FL · Member since 2017 · 52 posts · 18 votes
    5y

    Hey @Matt Carruesco , there’s many good answers in this thread, both practical and theorical.

    First, you need to define what “good market” means to you (appreciation, cash flow, fix and flip, etc).

    However, I think the best answer is to make sure you have a solid team to be your ‘eyes and ears’ wherever you decide to invest.

    We have a lot of experience and success investing out of state in Baltimore, MD and St. Louis, MO, with a full team of Local Property Management and renovated turnkey properties for around $100K with 10% + Net Cap Rates.

    Let’s connect and chat!

    P.S. I also recommend David Greene’s book Long Distance Real Estate Investing from BP library. Great resource! 👍🏼

    2Reply
  • Ozzy SirimsiBusiness Member
    Real Estate Agent · Baltimore, MD · Member since 2016 · 1k+ posts · 782 votes
    5y

    I second @Ivy Sanmiguel on this one. If you don't have good local team, the best market can be worst in a second with the wrong property manager, wrong pm, wrong agent.

    I thing is equally important to find a person/team you can trust and build a relationship with.

    1Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    5y

    It's hard to beat Detroit's cash flowing properties - but you'll lose a lot if done wrong!

    We're here to help:)

    [email protected]248-209-6824
    Logical Property Management4.9451 Reviews
    WebsiteView Page
    0Reply
  • Lauren Ruppert
    Rental Property Investor · Member since 2019 · 67 posts · 29 votes
    5y

    @Ronnie Galindo Wow, you're awesome.

    0Reply
  • Luka Milicevic
    Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes
    5y

    @Matt Caresco

    I have someone reach out to me from CA, NY, Chicago once a week looking to either move to Nashville or invest here.

    My advice is start looking into Austin, TX and Nashville, TN. 

    Visit each one for a weekend.

    Pick one

    Move there, don't just look to invest....move. 

    1Reply
  • Lisa Roberts
    Austin, TX · Member since 2020 · 12 posts · 3 votes
    5y

    Surprised I haven’t seen Salt Lake City in here at all. Silicon slopes 

    0Reply
  • Angela Kathmann
    Rental Property Investor · Cincinnati, OH · Member since 2020 · 4 posts · 2 votes
    5y

    @Matt Carruesco

    Check out the Bigger Pockets Podcast - Finding & Analyzing A Long Distance Real Estate Investment - Dream Investment Adventure - Episode 1 -10.

    This is different from the regular podcast that Brandon and David do. They do a 10 part series that walks you through each step of the phase of investing long distance. It did wonders for my “Analysis Paralysis”!

    Best of luck!

    1Reply
  • Crystal SmithPro Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
    5y
    Originally posted by @Matt Caresco:

    The California exodus to places like ID, MT, TX, etc. have generated a ton of interest in Californians investing in other markets. 

    What are the best ways to make a market selection as a starting point for a new investor? 

    Great question. Here are the criteria we used when first investing long distance:

    • Do we have or can we build a network in a market. No network, no business
    • Is the market large enough where it can provide some diversity in opportunites
    • Is there enough sales activity that when it comes time for us to sell our property we can have some confidence of doing it. 
    • Can we get there on a direct flight

    That's the criteria we used when first investing long distance & we continue to use it.

    312-681-7487
    0Reply
  • Erik B.
    Rental Property Investor · Amityville, NY · Member since 2018 · 351 posts · 441 votes
    5y
    Where did you wind up investing? Cincinnati is on my list or possible markets , do you invest there?


    Originally posted by @Angela Kathmann:

    @Matt Carruesco

    Check out the Bigger Pockets Podcast - Finding & Analyzing A Long Distance Real Estate Investment - Dream Investment Adventure - Episode 1 -10.

    This is different from the regular podcast that Brandon and David do. They do a 10 part series that walks you through each step of the phase of investing long distance. It did wonders for my “Analysis Paralysis”!

    Best of luck!

    0Reply
  • Angela Kathmann
    Rental Property Investor · Cincinnati, OH · Member since 2020 · 4 posts · 2 votes
    5y

    @Erik B.

    Other than owning my own home here presently, I'm not currently investing in the Cincy Market. I'm in the process of actually relocating to Tampa so hoping to BRRR House-hack there first.

    Once I get settled in Tampa, I definitely will be turning back to Cincy to add some strong “cash flow” properties to my portfolio. Cincy, NKY and SE Indiana all have awesome cash flow and appreciation opportunities. Job growth is strong and only growing even more since Amazon opened a new air hub, creating another 2,000 jobs!

    1Reply
  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    5y

    @Matt Caresco  simple, look which market has provided double digit net caps over the last 8 years, with 50- 100% appreciation , then surround yourself with a team that handles all for you 

    0Reply
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