Hi everyone - I would love your suggestions on how to choose the right BRRRR market for one's own circumstances. I'd be particularly interested to hear from people who have done out of state BRRRR successfully in the past and what worked for you when determining which market to focus on.
I am located in a high cost city and will probably be investing outside of my city, therefore, there are tons of potential choices. I'm trying to take action to narrow down, but want to do so strategically. As such, I'm wondering which factors people think are most important in making this choice. The questions/points below come to mind but I'm open to any/all feedback. Thank you in advance.
Important to know someone in the area? There are some lower cost markets where I have friends/family in town. They aren't real estate investors but could still be there to provide an opinion on neighborhoods, make introductions, check up on properties, maybe stay with them when in the area. How important do you think this is vs investing in an area where you are a complete outsider/newbie if the numbers look better?
Typical age of property? I've seen some markets where most housing inventory is <10 years old and doesn't need work. Others where most inventory is 100-150+ years old and rehab might be a big undertaking / reveal hidden issues. Is it therefore important to choose a market where there is a high inventory of homes that are in some sweet spot - (maybe ~20-50 years old?), therefore more "ideal" BRRRR age?
Within driving distance or flying distance OK? Especially if you're new in a market and also are choosing somewhere without friends/family in that area. Or would you simply look at the whole country without any bias as to how far away from you it is.
Property tax rate? I found one market where I had family in the area, and the prospects as well as price/rent ratios looked pretty good. However, I kept digging and learned the taxes are really high for out of state investors (~4x vs a primary resident), which eats into cash flow a lot - as much as ~20% of rent. Would you simply rule this out and move on, or do you think it could still have merit?
Stability and rental demand. Do you trust where rents are today for any market, or do you worry that in certain areas the durability of these rents is less than in other markets? Any quick tips on assessing this?
Place where there are properties available at relatively low prices - making all cash purchase more realistic.