Professional · Bothell, WA · Member since 2016 · 25 posts · 9 votes
Hi All - I've been a BiggerPockets member for a few years now with the intent of starting my real estate venture 3 years ago. Well, it didn't happen, but we just did our first investment through a syndication group in October (YAY!!). We would like to purchase our 1st multi-family in 2020. We are open to out of state investing, but are trying to figure out how to determine / narrow down what states are options for us. Would love any guidance/food for thought on this.
Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
6y
Joe Fairless's book on multifamily syndication has a guide on how to select markets. It's a good read and the content is actionable. It's going to take a lot of work, trips to the market, and many deal analyses!
@Michael Ealy - thanks for sending the article. Will definitely take a look at this. I know a few folks above mentioned reviewing census.gov for this type of data aswell. What resources do you leverage to inform information on jobs and growth opps? Are you open to discussing more about investment opps in OH - would love to learn more about what you've been doing (I was wowed by 1,000 units!) and pick your brain further!
Sippy,
One resource you can use are MF reports from lenders like Arbor.
Lenders tend to be more objective than real estate brokers.
First and foremost, I would define my investing goals. That is, what is my appetite for cash flow vs appreciation. Also, how risk averse/affine am I. These parameters will help decide what kind of yields you are searching for, which you can use to filter down your list of macro markets.
I then suggest beginning your search by looking at the data, such as demographic data from the Census. This info will give you a decent idea of what to expect and help filter down your search to a few cities.
Some of the metrics that I find valuable to understand are:
- Population on SNAPS (supplemental nutrition assistance program) percentage
- Property Tax Rate
- Median Age of Buildings
- Number of Structures by Units (SFR, Duplex, Triplex, Quadplex, etc...)
- Median Rents by Number of Bedrooms
- Unemployment Rate
- Employment Sectors Percentages
These are just some of the indicators that will help you understand the quality of an area as well as the kinds of returns one is to except.
Also take into consideration the direction in which each of these market indicators are trending. This will better help you get an understanding of not just where market is today, but also where it may be heading.
Once you have selected a few cities that meet your criteria, it's then time to dive deeper into researching the sub-markets that comprise each of them.
The sub-market selection will have more of an impact on price as well as investment performance than the city itself.
If this is your first investment, I don't suggest trying to find the highest cash flowing property however. The reason being that this will likely be in a D/F neighborhood, which will expose you to more risk than needed when starting out.
New to Real Estate · Brownsburg, IN · Member since 2017 · 31 posts · 16 votes
6y
@Michael Ealy,
Hello can you please direct me to the article your referring to?
We just moved to Indy from Chicagoland and trying to convince my wife to do real estate and she's concerned to get involved because of upcoming recession.
If I can show her some facts/data to validate the Indy area "should" be able to absorb it if it happens.
Man thanks, Michael
New to Real Estate · New York, NY · Member since 2019 · 234 posts · 264 votes
6y
@Sippy Hira
I recommend that you check out Neal Bawa’s youtube video or his free class at Udemy. He gives out good lectures about numbers and data driven approach to pick right states and cities. I found it very helpful to shape my own criteria.
@Michael Ealy,
Hello can you please direct me to the article your referring to?
We just moved to Indy from Chicagoland and trying to convince my wife to do real estate and she's concerned to get involved because of upcoming recession.
If I can show her some facts/data to validate the Indy area "should" be able to absorb it if it happens.
Man thanks, Michael
Cincinnati, OH · Member since 2013 · 1k+ posts · 1k+ votes
6y
@Sippy Hira What size deal are you targeting? When going out of market focus on finding a great team. As far as resources, I have a list that I use. Send me a PM if you want me to send it to you.
@Michael Svoboda We just left Chicago and moved to Cincy, but target Indy as a multifamily market. I have some data and info you may be interested in.
Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
6y
@Sippy Hira
I’m local in Kansas City. There has been a lot of migration here and money being invested here from other markets. It’s mainly middle to low upper class in most cities. It’s also cost effective and rents have been rising. The average is around 1K and a few years ago it was around 700. I specialize in OOS investing, I’d be happy to chat.