Analytics based investing

5 Replies

I am new to the real estate investing world (unless you count my over-leveraged primary residence that has been a mediocre rental since I moved out of state 5 years ago). I came across BP a couple of months ago and have been reading the blogs, forums and have listened to most of the podcasts. I am amazed at this community who will openly share their knowledge with others. So, thank you to everyone who takes time away from their business and family to share their knowledge with us.

I come from an analytics background, so it is how I think about things. As I learn more about real estate, my thoughts continually go back to the analytics behind various investments and geographic areas. I am thinking back to podcast 1 when Marty Boardman said that he and J Scott looked at Milwaukee flipping because of the 51% price difference in retail and distressed properties. Looking at buy/hold, we talk about about the 2% rule (or said another way, price to rent ratios).

So, are there sources for comparing things like distressed vs. retail pricing, or price to rent ratios, across geographic markets? Certainly there is a better way than looking at individual sales and individual rents to determine this information?

Thank you for any direction you all can give.

Hello @Account Closed and welcome to Bigger Pockets! This site is so great because instead of spammers and scammers, there are real honest people here willing to share knowledge and advice. I don't think there is a better real estate website out there.

welcome @Account Closed - I personally do not know of anything that does that across the board. I know Realty Trac puts out reports, but usually only the top 10-15 markets and then numbers are very general

@Account Closed

I used analytics in order to identify the buy and hold area that we shifted towards. I looked at all areas within an hour of my house based on fundamental aspects (universities, large institutions, etc).

I then drilled down into the census data for a large amount of them to create ratios for comparison. One that I believe was very beneficial was median income to median home price. When you list out twenty cities and rank them by this metric you can tell what areas aren't going to work well for rehabs vs rentals. Compare some other metrics and see if one area pops up a couple of times.

The census data is very easy to navigate. You may find something of interest in it.

Best of luck.

Thank you all for the feedback.

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