How do you evaluate markets for investing?

Question

What resources, information, services, tools, publications, professionals, etc. do you utilize to evaluate markets for investing?

Jay Toluganti · Answer

You mean to build single family rental portfolio or flipping houses?

Nadean Willis · Answer

Personally, to evaluate a market, I would look at a few things:1) Population: Do you have enough people to want to rent or buy your investment property?  Are enough of them that are adults too young for nursing homes?2) Job Market:  Is the job market strong enough?  You want both enough jobs to be available and a market where people aren't having to work 2-3 side jobs to make ends meet. This ensures people will qualify to rent or buy said property.

3)  Talk to the locals.  What do local investors say about their own market?

Bo Smith · Answer

For me it's three layers. First, macro fundamentals: population growth, job creation, median income trend. I use Census data, Bureau of Labor Statistics, and CoStar for that. Second layer is real estate specific: days on market, price per square foot trend over the last 5 years, cap rates on rentals, flip margins by neighborhood. That tells you if a market is actually investable for your strategy.

But here's what matters most: talk to 5-10 local investors and GCs in that market. Data is useful but lived experience is gold. A GC can tell you in 5 minutes if a market is overheated, if labor is available, if investors are getting priced out. They know what rehabs actually cost. That's worth more than any algorithm.

I've passed on markets that looked great on paper because boots-on-the-ground investors told me cap rates are misleading or the flip market was oversaturated. I've also found hidden markets that nobody talks about because one local investor clued me in.

Annette, are you looking to invest locally or exploring new markets? That changes the research approach pretty significantly.

Annette Barnett · Answer

to build a single family home portfolio.  I know WHAT to evaluate, but I'm hoping to find resources, tools, professionals, etc. to help me evaluate most quickly, thoroughly and efficiently.

How do you evaluate markets for investing?

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