Strategies for finding and narrowing down cities for investing

[Ryan McGlasson]

Hello everyone! I had a question I wanted to ask the general biggerpockets community because I felt it could not only benefit my self to know but others. When you are getting started in real estate investing or even if you have already invested in a city, what are your methods, strategies and criteria you research and look for to branch out and find new cities across the US to invest in that fit your niche? Not specifically the properties or types, but the cities or states themselves.

Do you have states in mind that you look into individually and then begin to determine potential cities?  Do  state tax rates and other local real estate laws influence where you invest?

What city characteristics do you look for or is it strictly cashflow numbers?  How else do you determine if a city or a rental will be rented out quickly?   Tons of questions I know! Just hoping to get a discussion started :)

[Omar Khan]

@Ryan McGlasson This is very complex subject and is highly dependent on investor preferences and the size of the investment. For instance, if you're only looking to invest in a few houses, you are best investing in your own market (to begin) before moving out. You might find better cash flowing deals in other markets but managing them is a major PITA. 

Many folks on these forums complain (rightly) about the sky high California prices BUT Cali also enjoys unmatched capital appreciation rates. So you have to take the good with the bad. 

If you're looking looking to invest in larger commercial properties (multifamily, offices, industrial, etc) - personally or through a partnership/syndication - then you should be more concerned with the points raised by @Caleb Heimsoth.

My article on choosing the right real estate market and avoiding the most common due diligence mistakes should help you get started.