Is market analysis important for a newbie?

Question

I’m interested in starting out my real estate journey in Texas, and there are a few markets in and around major cities. I’m not sure how to get started with market analysis so I can compare various cities then neighborhoods  and find a target market that I can begin investing in. I want to see the bigger picture so I can start looking at deal with a little more background. Help.

Zach Yusuf · Answer

@Jon Shoop wow! This is really amazing insight Jon. I appreciate you taking the time to respond.

I’ll take more action looking into each area from a residential point of view.

Jonathan Oh · Answer

@Zach YusufGo where people and jobs are moving to. Analyzing a market is pretty simple. Choosing which neighborhoods to invest in is much more complicated. Connect with local investors, agents, property managers and get their opinions on where they are seeing the most demand. If you want stability, try sticking as close to the median home value as possible. Hope this helps.

Chris Stroup · Answer

Reach out to people involved in the markets you are interested in.  Real estate agents, property managers, investors, people that are actively involved in the market.  They will be able to talk to you about trends.  What strategy works the best and what doesn't work as well.

You can probably get a head start just by searching the forums.

Jon Shoop · Answer

@Zach Yusuf a market analysis is good for a broad overview of an area. But depending on the scope of it, I don't think you'll really be able to hone in on it. Especially with an area as diverse and large as DFW and North Texas.

I suppose I'm more experienced with a commercial market analysis than residential. I know for commercial, factors like traffic count on the streets as well as target businesses within the vicinity are going to weigh heavily in the decision.

Whereas residential, factors like: large campuses (universities; work campuses - Toyota, Hospitals, Texas Instruments, Alliance Center; and military bases), and outward growth of a city will weigh more heavily.

Being the area that it is and the numerous major hospitals, university campuses, and large employer facilities have lead to Dallas and Fort Worth having more renters than owners. Which is a higher ratio of renters to buyers than the national average.

So from my experience in terms of honing into specific areas, it depends more on what kind of tenants you'd want to attract more of. And then just the level of home and area you want to be in (how much money are you willing to spend per property). I have a client with a $500k+ property that cash flows and I have clients with $200-250k homes that cash flows. Then there's plenty of people buying $100-150k homes and fixing them up to rent.

Tl;Dr - I think there's going to be a lot more intricate factors needed to really hone in on a specific area to invest in. However, in DFW the metroplex in general is strong so there's not really many "bad" areas to avoid. The majority of DFW I've seen has been great for a lotnof investors.

Joe Villeneuve · Answer

Common properties based on square footage, in a tight group, that have the same tight range of sold comps and/or rental comps.  Period.  The rest is fluff.

Jon Shoop · Answer

@Zach Yusuf you're welcome! The other posters also have some great points. I appreciate you asking the question because of how good of a discussion came of it!

Jonathan Oh · Answer

@Zach Yusuf City-data, rentometer, and housefolios are some pretty good tools you can try out. DM if you're looking for more local data. This is much harder to find.

Zach Yusuf · Answer

@Jonathan Oh thanks Johnathan. The idea of the median value is amazing. I was looking for how to maintain the balance between high end and not to expensive. Do you have any recommendations on tools you might personally use to dive into the data?

Zach Yusuf · Answer

@Chris Stroup Thank you Chris. I’m currently looking through the forums , trying to get a good grasp of how things work here. Found a few good blog posts as well. Just need to learn how to share them on here.

Zach Yusuf · Answer

@Joe Villeneuve Thank you Joe!

Is market analysis important for a newbie?

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