How do you pros analyze markets?

7 Replies

Brand new aspiring real estate investor here.  I am looking to analyze markets for how well they will either cash flow through buy and hold rents AND/OR how well properties are likely to appreciate over time.  Currently focused on single-family or small multi-family properties.  What tools or strategies to folks recommend to begin to analyze various markets?  I'm open to focusing close to home (Northern Utah) or long-distance markets.  Thanks in advance for helping this noob out. 

@Ryan Lloyd

Welcome to the community! Take advantage of your pro membership and use the analysis calculators here on BP. A really basic method is to just jump on Zillow, choose an area/neighborhood, take note of the average price to rent say a 2-3 bedroom house, or whatever your criteria are. Once you've got an idea you can switch to look for houses for sale in that neighborhood or close to it. Then use the rental property calculator to punch in your numbers. Again, very basic method but it's not a bad place to start. 

Let me know if you'd like to run through a couple of practice properties together and I'd be happy to help out!

@Dan Guenther Thanks so much!  Great suggestions that I will definitely give a try.  I need to go look at the analysis calculators for BP and will.  But in the meantime, are you aware of any specific BP tools built around analyzing specific markets?  

@Ryan Lloyd - There are lots of good sources out there. I would recommend looking at large broker firms sites as they will put out incredible information on different markets. so Marcus and Millichap, Berkadia, Cushman and Wakefield Etc. There is also a ton of good data on the census site and the bureau of labor statistics. Also guys like Neal Bawa, Joe Fairless and others have put out really good info on their sites on how they analyze a market to invest in. City-Data.com and datausa.com are also good sites with lots of good information. population and job growth are big ones for me. I also will look at rent to price ratios to get a better feel if it will be a cash flowing market. However that wont give you a complete picture so calling PM companies and RE agents will also be incredibly important once you narrow it down to a few markets. I have found that property taxes and utilities can have a large impact on how well a market cashflows and that is why price to rent ratio isnt a perfect metric. Good luck with your search. 

@Ryan Lloyd

Its very common for investors to reach out to me before purchasing a property, so they can get a better idea of what it would rent for. I use RentoMeter, as well as our own system to compare with other homes in the area. If you continue to invest in Utah I'm more then happy to send you a free analysis for any property you consider purchasing. Feel free to message me directly, welcome to the community!