Where to invest?

Question

Many times, people ask where is the best place to invest.  Which state?  Which market?  What type of properties?  I came across this article today and found it very interesting.
http://www.foxnews.com/politics/2013/03/31/survey-new-york-california-last-in-personal-freedoms/
"The top five states with the most freedom are North  Dakota, South Dakota, Tennessee, New Hampshire and Oklahoma, according to the study from the center, at George Mason University in Virginia."

I find this interesting as the last two rentals I purchased were in Memphis, TN and a suburb of Tulsa, Oklahoma.

Mike McKinzie · Answer

I find "Where to Invest" lists very Helpful and Informative, but not definitive.  After all, it is just one person or groups OPINION.  But valuable data can be found in all these lists.  Of course they are not the panacea, how many lists had Las Vegas, Phoenix and Florida on them in 2008?

So the more data I get, the better chance I have of making a good decision.

Nate Garrett · Answer

Good article Mike M. Glad to see my home state of Oklahoma make the list of top 5 for personal freedoms. As far as where to invest, there are so many lists that are published by analysis firms. Just Google "top real estate markets for investors".

I find these "where to invest" lists fairly useless as they change every 6 months. Tulsa was the "Top market for conservative real estate investors" in 2010. http://www.tulsaworld.com/article.aspx/Report_names_Tulsa_top_housing_market_for_conservative/20101008_32_e1_cutlin559627

It is now nowhere to be found on these "top-10" lists, although the Tulsa rental market has improved since 2010.

Wouldn't it be nice if you could, as in investor, move your investment capital from one MSA to another whenever the forecasters changed their top-10 list?

Unfortunately, transaction costs, commissions, and make-ready expenses will typically dissolve any gains that are made in the short term. That is why I advise my clients to pick an area and properties that they will be happy owning for the long-term.

When shopping for a market to invest in, some important factors include acquisition price vs. market rents (P/R ratio), job and local economic growth potential, and market stability (both rents and housing values). Try http://trends.truliablog.com/vis/rentvsbuy-winter-2013/ for a decent nationwide visual depiction of P/R ratio.

As a painful lesson that so many learned in the downturn, it is folly to include the gamble of price appreciation in our real estate analysis.

We live in a society that focuses so much on the short term, but real estate investments are much better suited to the long term. The difference between real estate speculation and real estate investing is a big one and the two different philosophies are often misunderstood. Benjamin Graham (Warren Buffet's mentor) wrote in Securities Analysis  "An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative."  These words are as true today as the day in 1934 when they were written.

Mike McKinzie · Answer

I bought in Bixby and almost Broken Arrow.

David Schneider · Answer

Hey Mike, I'm a new investor looking at properties in the Sapulpa and Glenpool areas. Either of those the suburb you mentioned?

Jon Klaus · Answer

Lowest ranking states for personal freedom: New York, California, Rhode Island, Hawaii and New Jersey, all pretty pricy RE, compared to the top five.

James Hiddle · Answer

Well judging by recent threads on California law concerning anything real estate it really doesn't surprise me that they are next to last.