How to learn your market?

[Pratik P.]

Hello BP'ers!

I know that one of the most important things a new investor can do is to learn their local market. So over the past few months I've been watching every multifamily property that goes up on Loopnet in my area. For each of these, I'll look through the flyer and analyze the deal to see how well it cash flows. 

Apart from doing that and listening to podcasts, reading tons of discussions, etc, what else can someone do to be more ready to invest in multifamily real estate in their area? 

Any and all suggestions are greatly appreciated!

[David Thompson]

Pratik,

Kudos for recognizing the market is the most important thing. There's several things you could look into but here's a few.

1) market - favor cities w/ MSAs > 250k. Pop and job growth > natl avgs. Favor diverse economies.

2) Submarket - within a city are several submarkets. Dallas for instance has 28 submarkets. We want to be in the strongest growing submarkets.

You want to start collecting data on these apt properties that are on loop net and other brokerage sites. When you analyze these deals, you should have a spreadsheet that tracks cost per unit, cost per Sq ft, and other such imp property metrics by submarket. This helps you start getting a feel for comparisons, values, what areas are trending pos, neg, etc.  

Pop, job growth, rent growth, income per capita, etc for these submarkets are available from 3rd party sources.  

3) City commerce websites. Read on what's happening in the area. For instance, in Dallas, we purchased a large apt community w/n 10mIles of where Toyota was moving there NA headqurters creating a $7B economic impact to the area. Look for catalsts that may drive demand for rental units.

4) Access to freeways and major arteries. Properties should be w/n easy access to get people to jobs, schools and shopping conveniences.