Determining Market Performance

3 Replies

I am looking to begin my real estate investing career by investing out of state. I am currently in California. I have looked through dozens of marketplace deals on BP plus countless on Loopnet. My question is, how do you gauge an emerging market? I frequently hear Denver is a hot market for instance. OOS investors, what do/ did you look for in out of state markets? Thanks in advance for any insights!!

Here's a recent blog post that might help.  But it by no means suggests that these are the only places one should invest.  You can invest in most towns, though some might be a better choice for you than others.

I do buy and holds, so emerging markets aren't really anything I care about.  I just want a steady market.  I suggest looking at what kind of investing you plan to do and, if renting, who your target market is.  In my case, I was interested in college students.  I came up with colleges I might be interested in investing near and went to Sperling's Best Places to Live to look up the cities.  I was looking for a good sized city--at least 60k, not too much crime, reasonably low vacancy rates in the area, but fairly high rental rates (percentage of folks who rent).  Those were my main things I was looking for.  You might have other criteria.

Another thing out-of-state investors look at is where they go or want to go regularly or where they have family or close friends.  If you already visit a relative in AZ several times a year, why not look there instead of MI where you've never been or ever wanted to go?

Just my thoughts on investing in locations outside my area...

Be SURE to budget for a property manager when running your numbers!

Good luck!

Well, you need to be able to distinguish between hot markets, and hot markets where the numbers shake out. Denver, LA, San Fran, Phoenix, etc. are all "hot" markets and with great market fundamentals. But you aren't going to find cash flow there. So you need a happy middle of a market that is a) solid and with good market fundamentals and b) with investor-friendly numbers. 

This may help some-

That helps break down various factors to look at. Once you understand those, you can start asking people what markets they are investing in and weigh those against those factors and see how you personally feel about the market.

Thanks for the replies. I’ll be digging in to both articles and will use those as spring boards! Thanks a million!!

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