If you didn't own in your current market... Where else would you consider?

13 Replies

The answer for me is pretty simple... Omaha, Nebraska, or Fargo, North Dakota. 

Omaha, Nebraska

- very solid, long-term businesses-- transportation, Agriculture, financial services 

- Creighton University, University of Nebraska Omaha-- great schools with graduate programs

- Relatively low barrier to entry

Fargo, ND

- programs to bring in business

- North Dakota Oil Boom-- Bakken Oil Fields

- Strong economy -- diverse SMB businesses 

- Relatively low $ barrier to entry

- low crime rate

How about you? Where would you own? Small town in Washington? Metropolis in Colorado? ;-) 

Cheers

Tom 

Omaha is high on my list, but I have a harder time assembling the ground resources out there (hint hint for anyone who wants to connect). 

I really like the business diversification of Little Rock, and that is probably in the three year plan. Richmond, Virginia has good significance with my extended family, which could make it a convenient move... but I haven't seen enough positive signs there to jump in whole hog.

@Brian Johnson nice.. I almost went to Creighton...What a great city to invest in.

@Trevor Ewen  There's a lot to like about Richmond. Especially as VCU continues to expand and we're seeing more industrial and office jobs flood in yearly. In addition, the city has a great beer/food/art scene that is redefining the culture and keeping folks interested in renovating and living in the once-neglected historic districts around town. Give me a shout sometime if you'd like and we can discuss the current state of the River City. :) 

Originally posted by @Jon Deavers:

@Trevor Ewen  There's a lot to like about Richmond. Especially as VCU continues to expand and we're seeing more industrial and office jobs flood in yearly. In addition, the city has a great beer/food/art scene that is redefining the culture and keeping folks interested in renovating and living in the once-neglected historic districts around town. Give me a shout sometime if you'd like and we can discuss the current state of the River City. :) 

Hello everyone,

I am in search of places throughout the mainland in general to get a grasp understanding of the markets where I can possibly invest in the future. I would like to connect with you to find out more about your markets. Since I am in Honolulu, I am trying to find an alternative. Will send requests.

Much Aloha from the islands!

@Tom Henderson  @Trevor Ewen  We have done over 100 deals in Omaha and will even entertain selling a few of our rentals as turn key cash flows.

1) The very next closest market to me

It is vital that you know your market. The farther away the harder and more expensive it is to learn the market.

2) Texas

Conservative and business friendly. That bodes well for long term growth.

I agree with @Jon Deavers  ...Richmond is a great DIVERSE city to invest in! The many different neighborhoods and surrounding counties add to the city's opportunities. VCU-MCV (Medical Campus of Virginia) and overall health industry is booming and bringing all sorts of new jobs and grad-students. The largest age population is 20- 35yr, making for great rental and first-time home buyer markets. Lots of history combined with new culture create a niche in rehabbing, big federal and state agencies here, large corporate headquarter presence, active entrepreneurs ....and my favorite (as far as living), mild weather with all four seasons:) 

@Trevor Ewen  "jump" into Richmond

Tom,

I like the Houston, San Antonio, and Austin markets.  I work in the commercial lending business and have seen a lot of good deals in these markets.

Mark

If you are unfamiliar with an area, or are looking for new areas in which to invest, asking for opinions is one option.  However, with the availability today of so much data, many intelligent conclusions can be drawn simply by procuring and evaluating the data.  And much of this data is free and readily accessible via the internet.  

A tried and true measure that has been around for a long time and is still relied upon today is the ratio between median household income and median home prices in any given market.  Historically, on a national scale, median home prices average about 2.2 to 2.5 times median household income.  For example, if median household income were $100,000, then median home prices average between $220,000 and $250,000.  Most observers would consider this a "healthy' real estate market.  When those ratios start getting out of whack, specifically on the high side, then you start to have concerns about the affordability of homes.  I have historically only considered markets where the ratio is less than 3.0.   So just now I went to www.city-data.com, and checked the national ratio, and the ratio for Omaha and Fargo. The national ratio is 3.20 - significantly higher than historical.  But I'll get back to a very good reason why it is higher in a minute.  The ratio for Omaha is 2.26 - very attractive.  The ratio for Fargo is 3.71 - very unattractive.  Now this is just one measure, and there are certainly other things to consider.  Fargo may be experiencing a boom, perhaps due to the oil industry. If you like riding booms, great.  But the problem with booms is you never know when the bust is coming.  

In my opinion, the median cost of a home divided by the median household income is a BIG measure, because it incorporates so many other measuers including unemployment.   It speaks directly to the point of affordability.  A common statistical statement is that over time, everything eventually regresses to the mean.  In other words, if the market is too high, it will adjust down, and vice-versa. Since the national average is 3.2, anything below it will adjust up, and anything above it will adjust down, over time.  

I would also encourage you to look at historical trends - what has happened to the homeprice/household income ratio over time. So if you like Omaha, and you are not living in Omaha, check that out.  If you see the ratio rising, find out why.  If you see it falling, find out why.  For me, the ratio for Omaha tells me its pretty attractive.  Fargo would concern me.  I would look very closely at the trends for Fargo or simply look elsewhere.  (BTW, my wife is from Omaha - I love the city.  She is a Mercy High school girl for those of you who might care!)

Getting back to one reason the national ratio is at 3.20 - mortgage rates.  The mortgage rates have been at historically low levels for such a long period of time, that people can afford more expensive homes for the same level of income.  This drives up home prices, skewing the ratio.  So what happens when the morgage rates drop?  Fewer people can afford those home proces.  So the home prices will start dropping.  And the ratio will drop, regessing to the mean. We have a morgage bubble, causing the boom.  But busts will follow.  For the steady, long term, play, stay in markets below the national average, and ideally below 3.0.  

@Allison Ezzi    Do you have a favorite are of Richmond that you like for rehabs/flips?  I'm looking to do a deal as soon as we can find something good and have the money ready....thanks!

oh, and by the way, MCV stands for the Medical College of Virginia   ; )

Another plus about Fargo (possibly Omaha too, I'm just not as familiar with it) is the culture of tenants paying their bills. It's also a LL friendly state, if someone doesn't pay rent, it takes minimal time and effort to evict them. We own a SFH there, and a 4-plex in Minot we are going to put on the market shortly.

I would also say you could concentrate on certain types of markets, say college towns (think Omaha, ann Arbor, Charlotte would be an example)s or military communities (Fayetteville NC, Colorado Springs,  Killeen TX) .  They would have more in common with each other than cities in the same geographic region 

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