How to find properties/areas that appreciate in value?

Rental Property Investor · Wichita Falls, TX · Member since 2018 · 353 posts · 79 votes

How can I go about searching for deals/properties that appreciate in value over time? Looking at the tax appraisals? Or asking a realtor? Really would like to look see numbers and not have a realtor just speculate or tell me this is a "good" area. And advice?

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David Krulac

Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes

We look for fastest growing areas. We invest in the fastest growing county in Pennsylvania, Delaware, and Tennessee. Was recently in North Carolina, there are 100 counties and about half had had growth over the last census figures, and half have not had growth. The growth in the state is 9.5% but the fastest growing counties in NC have growth of over 20% between the census years of 2010 and 2020. I'd invest in those fast growing counties, and the economy, job growth and population growth will push up many of the properties in those areas. I was in Raleigh, Charlotte and Wilmington, all in growth areas. In Charlotte there were many construction cranes, indicating active building going on there. When I was in Nashville, Tn, last I counted 16 construction cranes in downtown areas, big growth is going on there. Rising tide raises all boats.

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David Krulac
Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
2y
We look for fastest growing areas. We invest in the fastest growing county in Pennsylvania, Delaware, and Tennessee. Was recently in North Carolina, there are 100 counties and about half had had growth over the last census figures, and half have not had growth. The growth in the state is 9.5% but the fastest growing counties in NC have growth of over 20% between the census years of 2010 and 2020. I'd invest in those fast growing counties, and the economy, job growth and population growth will push up many of the properties in those areas. I was in Raleigh, Charlotte and Wilmington, all in growth areas. In Charlotte there were many construction cranes, indicating active building going on there. When I was in Nashville, Tn, last I counted 16 construction cranes in downtown areas, big growth is going on there. Rising tide raises all boats.
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Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
2y
Appreciation is never a guarantee so you follow migration and development trends to hedge your bets. Your search right now sounds like it can be swayed based on data, but you need knowledge. Where do you want to invest? Is there an area near you that you want to bet on?
The Whole Foods/Trader Joes/Starbucks principle works as well. Wherever they are opening, values are going up and there is traffic. They can spend a lot more than we can on demographic research.
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David Krulac
Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
2y
@Jonathan Greene In the fastest growing county in PA, there is no Wholes Foods and just recently got a Trader Joes and has 3 Starbucks. There are other retail sites that are worth looking at including Home Depot, Lowes and even McDonalds. Home Depot/Lowes have done lots of demographic studies before building looking for areas where there is building going on as well as a population that is doing remodeling. In this county there was only 1 McDonalds that close and it closed to move a block away at a traffic light, from there former location in the middle of the block not at a traffic signal. In other areas it could be other chains like groceries or local chains. Also watch for chain retail stores that are closing, particularly multiple locations.
@Jonathan Greene
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Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
2y
Quote from @David Krulac:

@Jonathan Greene In the fastest growing county in PA, there is no Wholes Foods and just recently got a Trader Joes and has 3 Starbucks. There are other retail sites that are worth looking at including Home Depot, Lowes and even McDonalds. Home Depot/Lowes have done lots of demographic studies before building looking for areas where there is building going on as well as a population that is doing remodeling. In this county there was only 1 McDonalds that close and it closed to move a block away at a traffic light, from there former location in the middle of the block not at a traffic signal. In other areas it could be other chains like groceries or local chains. Also watch for chain retail stores that are closing, particularly multiple locations.
@Jonathan Greene

Someone also suggested that Sherwin-Williams is way ahead of the curve now on their research. For flippers, Home Depot is the one to look at. Also, areas where CVS and Walgreens are competing next to each other or near each others is a good sign.
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David Krulac
Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
2y
In our area Walgreen doesn't have a presence, but there are Rite Aids across from CVS. However, several Rite Aids have closed as well as CVS closures. Rite Aid is closing 154 stores, due to corporate finance problems, not necessarily local demographics.
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David Krulac
Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
2y
Quote from @David Krulac:

In our area Walgreen doesn't have a presence, but there are Rite Aids across from CVS. However, several Rite Aids have closed as well as CVS closures. Rite Aid is closing 154 stores, due to corporate finance problems, not necessarily local demographics.

Also CVS has multi-year plans to close 900 stores
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Evan HoppleBusiness Member
Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2023 · 284 posts · 420 votes
2y
@Nathan Frost

Get out there and find good pockets in areas that are being overlooked. This usually looks like a higher density of owner occupants within an area that is mainly rentals

[email protected]614-924-8151
Reafco Real Estate
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Shawn K HicksBusiness Member
Real Estate Agent · Gainesville, FL · Member since 2019 · 124 posts · 107 votes
2y
Quote from @Nathan Frost:

How can I go about searching for deals/properties that appreciate in value over time? Looking at the tax appraisals? Or asking a realtor? Really would like to look see numbers and not have a realtor just speculate or tell me this is a "good" area. And advice?

Not saying this will always work, but here is a local example of something that did work for one of my clients: 10 years ago here in Gainesville FL, there were a lot of areas with unfavourable crime statistics that were also bordering neighbourhoods in and around the University of FL. One of my clients around 10 years ago that grew up in San Jose CA, he informed me that his Uncle back home started buying affordable homes & lots that bordered areas that commanded a higher price. My client told me he wanted to do that here in Gainesville. I was a tiny bit skeptical, but sure enough, he was right. There are streets where he bought that after sun down, there was no way anyone that didn't live in those neighbourhoods would be just passing through. Now 10 years later there are luxury apartment & condo buildings, new construction homes, completely renovated homes etc in place of the old run down low income housing. Much of what he purchased is now worth anywhere in the 4 to 5x's what he originally paid for it range. I'd assume there are other markets around the country that the potential to do the same is there.
Every now and then when I drive South bound on Sw 6th st past what on the East side of the street used to be referred to as the Porters neighborhood, I just think in disbelief at how much things can change. In July of 2007 I got randomly shot at while driving by on Sw 6th St. The collision plate saved me from taking a hit from a 38. The run down trap houses that used to be there including the lots maybe 30-45k in value, now there are 400-550k homes sitting in their place. What once was an area that no one saw potential in, it's now been revitalised. Homes have been renovated & restored, new homes built, jogging trails that are actually safe to use, etc.
Sometimes you can find potential where no one else sees it. I would use the word speculation however. In this case it happened in a timely manner. In other cases, someone could have the same idea, but it may not come to fruition as fast as you might hope.
Good luck!
[email protected]352-871-5770
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Alecia LovelessPro Member
Member since 2019 · 3k+ posts · 2k+ votes
2y
@Shawn K Hicks Agreed. I’m currently taking a “chance” on a basically turn key duplex which is something new for me. I usually buy value add but those have become impossible to come by in the market I target. My realtor waffled on me buying this particular property because he felt like if I waited something better would come along. However since I first made an offer on this property four weeks ago I’ve seen prices nearby rise about $40K on every type of new property that’s been listed.
This area got the first Starbucks in 60 miles about 2 years ago and now Jersey Mike’s is opening next door to it. Five Guys has been scouting this area for about 3 years but hasn’t found the right location to meet their demographics.
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Shawn K HicksBusiness Member
Real Estate Agent · Gainesville, FL · Member since 2019 · 124 posts · 107 votes
2y
Quote from @Alecia Loveless:

@Shawn K Hicks Agreed. I’m currently taking a “chance” on a basically turn key duplex which is something new for me. I usually buy value add but those have become impossible to come by in the market I target. My realtor waffled on me buying this particular property because he felt like if I waited something better would come along. However since I first made an offer on this property four weeks ago I’ve seen prices nearby rise about $40K on every type of new property that’s been listed.
This area got the first Starbucks in 60 miles about 2 years ago and now Jersey Mike’s is opening next door to it. Five Guys has been scouting this area for about 3 years but hasn’t found the right location to meet their demographics.

Us Realtors I admit are not always right. Sometimes you have to trust your gut instinct. 🙂
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David Krulac
Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
2y
In addition to the above, we also look for property in good schools' areas, low crime areas and in neighborhoods where most of the properties are owner occupied. We also strive for long term tenants and have had tenants who stayed more than 30 years. Our average tenant stays 12.5 years, which reduces vacancy (an underappreciated factor) and fixup costs to re-rent properties. Tenants pay their own electric and heat, and for single family properties all other utilities.
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Stuart UdisPro Member
Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
2y
It boils down to being on the ride side of the supply/demand equation. Identify areas with characteristics that will drive demand....accessibility, good schools, neighborhood amenities that improve quality of life (parks & recreation), quality retail/commercial etc. Walkable town centers have become very popular, even in suburban communities as well. Perhaps some of these amenities come later (schools, retail/commercial) but selecting markets that have the capabilities of incorporating these features is a good start. Lastly, cities/towns that have well thought out city planning and/or strict zoning if combined with the aforementioned characteristics will almost always lead to supply pressures that work in your favor.
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Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
2y
Quote from @Nathan Frost:

How can I go about searching for deals/properties that appreciate in value over time? Looking at the tax appraisals? Or asking a realtor? Really would like to look see numbers and not have a realtor just speculate or tell me this is a "good" area. And advice?

If you are buying with the hopes of appreciation that is NOT the way to do it. There is no guaranteed it will go up. Many factors can " get in the way ". I prefer to control my own destiny. Rentals with 15- 20% net caps, appreciation is just a bonus. So many will say, look for " low crime" best schools etc, BLA BLA BLA. I have been working in the B- D areas for years, terrible schools. Pricing has tripled or much more, (back then we were getting 25- 35% nets) again all just a bonus.
All the best,
BTW the deals are not with realtors for the most part. Over 10 years doing many deals I have never used a realtor,

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Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
2y
Quote from @Jonathan Greene:

Appreciation is never a guarantee so you follow migration and development trends to hedge your bets. Your search right now sounds like it can be swayed based on data, but you need knowledge. Where do you want to invest? Is there an area near you that you want to bet on?
The Whole Foods/Trader Joes/Starbucks principle works as well. Wherever they are opening, values are going up and there is traffic. They can spend a lot more than we can on demographic research.

We used to follow, Walmart , HD, and U-Haul :)
1 Reply
Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
2y
Quote from @Bob S.:

Quote from @Jonathan Greene:

Appreciation is never a guarantee so you follow migration and development trends to hedge your bets. Your search right now sounds like it can be swayed based on data, but you need knowledge. Where do you want to invest? Is there an area near you that you want to bet on?
The Whole Foods/Trader Joes/Starbucks principle works as well. Wherever they are opening, values are going up and there is traffic. They can spend a lot more than we can on demographic research.

We used to follow, Walmart , HD, and U-Haul :)

U-Haul has great migration data, the best in the business on where people are moving to.
[email protected]Podcast Guest on Show BiggerPockets Daily 667: 5 Amazing Benefits Multifamily Investments Offer (That Single Family Homes Don’t) by Gino Barbaro
Zen and the Art of Real Estate Investing59 Reviews
Website View Page
1 Reply
Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
2y
Quote from @Jonathan Greene:

Quote from @Bob S.:

Quote from @Jonathan Greene:

Appreciation is never a guarantee so you follow migration and development trends to hedge your bets. Your search right now sounds like it can be swayed based on data, but you need knowledge. Where do you want to invest? Is there an area near you that you want to bet on?
The Whole Foods/Trader Joes/Starbucks principle works as well. Wherever they are opening, values are going up and there is traffic. They can spend a lot more than we can on demographic research.

We used to follow, Walmart , HD, and U-Haul :)

U-Haul has great migration data, the best in the business on where people are moving to.

They need to get boats, there all moving to Belize :) I was there last year, wow, tons of Americans moving there
1 Reply
Yiyi Zhang
Investor · Durham, NC · Member since 2022 · 13 posts · 12 votes
2y
Quote from @David Krulac:

In addition to the above, we also look for property in good schools' areas, low crime areas and in neighborhoods where most of the properties are owner occupied. We also strive for long term tenants and have had tenants who stayed more than 30 years. Our average tenant stays 12.5 years, which reduces vacancy (an underappreciated factor) and fixup costs to re-rent properties. Tenants pay their own electric and heat, and for single family properties all other utilities.

@David Krulac would you mind sharing a bit more wisdom regarding how do you find "neighborhoods where most of the properties are owner occupied"? Also would appreciate any tips about how to find and keep tenant in long run.
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David Krulac
Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
2y
@Yiyi Zhang if you look at property records either online or at the courthouse, for each property besides providing the property address, it also provides the mailing address of the owner. If these two addresses are the same, probably owner occupied property. If different probably not owner occupied. One street where I owned two properties, I check the assessment records and found that of the 22 houses on the street 20 were owner occupied and my 2 were the only properties that were not owner occupied. On another street where I owned 4 SF rental houses, all of the other 16 were owner occupied. One of my tenants there stayed 13 years and many of the neighbors thought they were owner occupants. And when I sold those 4 houses the new buyers were all owner occupants.
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Nathan Frost
OP
Rental Property Investor · Wichita Falls, TX · Member since 2018 · 353 posts · 79 votes
2y
Quote from @Jonathan Greene:

Quote from @Bob S.:

Quote from @Jonathan Greene:

Appreciation is never a guarantee so you follow migration and development trends to hedge your bets. Your search right now sounds like it can be swayed based on data, but you need knowledge. Where do you want to invest? Is there an area near you that you want to bet on?
The Whole Foods/Trader Joes/Starbucks principle works as well. Wherever they are opening, values are going up and there is traffic. They can spend a lot more than we can on demographic research.

We used to follow, Walmart , HD, and U-Haul :)

U-Haul has great migration data, the best in the business on where people are moving to.

Be interesting to see where this data is.
0 Reply
Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
2y
Quote from @Nathan Frost:

Quote from @Jonathan Greene:

Quote from @Bob S.:

Quote from @Jonathan Greene:

Appreciation is never a guarantee so you follow migration and development trends to hedge your bets. Your search right now sounds like it can be swayed based on data, but you need knowledge. Where do you want to invest? Is there an area near you that you want to bet on?
The Whole Foods/Trader Joes/Starbucks principle works as well. Wherever they are opening, values are going up and there is traffic. They can spend a lot more than we can on demographic research.

We used to follow, Walmart , HD, and U-Haul :)

U-Haul has great migration data, the best in the business on where people are moving to.

Be interesting to see where this data is.

google new locations, :) I have not looked anywhere else as I have been in my market for 12 years,
All the best
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Steven S.
Specialist · LA & Ventura · Member since 2023 · 119 posts · 60 votes
2y
I like to see good $/sf growth over the last 2 years, and a market that is $700/sf and higher. This chart basically shows me which City's are most desirable (can do the same with Zip Codes):

Anything to the right of 0 means the $/sf is growing QoQ on average, and the height is the current $/sf of that market. As you can see, there are a few City's that are at 5%+ QoQ $/sf growth, but lots more towards 0-3%. Instantly I can tell the hottest markets from the normal and cold ones, and separately determine which one's I am priced out of due to crazy high values.

I'd suggest a similar value-based approach if you have the data to calculate on to identify a few markets to start looking for deals in, but remember this is still too broad of analysis to make a go/no-go decision on the projects you find. You still have to run comps on everything, determine construction costs & estimate ARV, carry & commission costs, etc to make sure that deal in that market makes sense.
To do that last portion better, I use Sales Comps and drilled-down market stats. Here's a chart on 90066 I generated from my tool under Market Stats > Sales Data > Specific Zip Code:

- My above chart (more available) shows the Avg Renovated $/sf (High) over time in this Zip Code, something completely different than charts/providers based on Averages/Medians only, like every other platform (RedFin Below, https://www.redfin.com/news/data-center/):

- Can't select smaller locations such as City or Zipcode for their $/sf data, so it's useless helping me underwrite/verify a deal.

- Can set Zip Code for Median Sale Price data, but again it's the median/avg so it's useless helping me underwrite/verify a deal.

Then if that looks decent, I'll run Sales Comps, and get a quick summary of some key metrics based on those comps. Take this 💥just-closed renovated property for example💥:

With my query of "22757 Charlemont Pl, Woodland Hills, CA 91364 5/4/2400-3050,0.6,300" we get an ARV Estimate that is ~4% off, and I picked this at random just scrolling through recently closed in my area

And the Market Stats $/sf of renovated property in that Zip Code matches up pretty well, so I know the ARV estimate is realistic:

You can also run Agent Stats to find/get in touch with the real top-agents in that area so you can triple-verify everything and/or list it with them when you are done.
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