How to Narrow Down Markets

Question

I need Help! I'm ready to get into real estate but I can't narrow down a market for me. I'm 19 so I don't have the resources to visit every city in Texas, Florida, or North Carolina and I don’t have the time to analyze the data from every city (which is what I started to do). Is there any general way to narrow down the good City's vs the bad ones besides going right to the most populous city's. I don’t want analysis paralysis to stop me in my tracks but i simply don't know where to start.

Thank you in advance for any of your input.

Thank you in advance for any of your input.

David Evans · Answer

@Joe VilleneuveThank you for your input Joe. Since I want to invest out of state I have the entire county at my disposal although I would like to narrow down my options. I understand the value of having multiple markets but since this would be my first rental I would like to settle on 5-10 city's, learn them, and then take action. My problem is that I don't want to invest in major city's because of the competition and there's so many secondary markets that I don't know how to narrow them down to 5-10 markets. For example Texas has around 200 city's with populations over 10,000 and I don't have the time to individually go through every city. It would be nice if there was a way to narrow down the 200 city's to maybe 20 city's that way I could individually analyze each city. I don't know how I would go through with narrowing down the long list of cities without doing countless hours of data analysis.

Amy Shutes · Answer

@David Evans

I can tell you the Charlotte metro area is a great area to invest.  I work with investors from all over the U.S.  if you would like some help I can help you.  I’m a realtor in the Charlotte metro area.  Just send me a message and we can chat.

Brad Jacobson · Answer

As a 19 year-old, I'd strongly recommend looking at house-hacking locally before investing out of state.  My first few properties were all acquired with 3-5% down since I purchased as an owner-occupant.

After I had a few under my belt, I started ganging a lot of equity and was able to to some equity moves that made me a strong buyer. I then started flipping locally and buying cash flowing properties in Memphis and Jacksonville.

I think I would have really struggled to make out of state investing profitable had I not had some hands on experience with local properties and flips.  Please consider house-hacking if you haven't done that yet!

Good luck!

Joe Villeneuve · Answer

90% of the REI's day that is spent on REI should be done doing market (not property) analysis.  PM me and I'll give you a better idea of what to look for and how.

Scott Mac · Answer

Hi David.

In Texas the big MSA's are Dallas/Ft Worth, Houston, Austin, San Antonio.

Dallas has 12 counties and 7 million people--pick a county and then a neighborhood. (It's kind of cowboy--(the Dallas Cowboys))

Houston has 9 counties, and a lot of flood zones<--know where these are--it not a joke. (it's kind of more Southern in feel)

Austin has 2 counties and many neighborhoods, prices are high and property taxes can be aggressive. (People from everywhere--come here to work--legally and illegally, it's the capital of Texas)

San Antonio is one county (Bexar) pronounced Bear for whatever reason, and several neighborhoods. (most mid western feel of the Big 4 MSA's--a nice place with the Alamo and a great River Walk)

These are the four MSA's most people think about when investing in Texas.

Also, it's not wise to buy in an area without doing a "Boots on the ground" and knowing about it.

Watch out for the real bad crimes, like Rape, Murders, and car jackings. Some neighborhoods are much worse than others.

Texas has a Ranch that's bigger than the entire state of Rhode Island.

Texas can fly it's flag at the same height as the American Flag (it's the only state that can do that--and it does!).

Good Luck!

This is the Texas Triangle

Texas Flag Height

Rod Hanks · Answer

@David Evans

Start in your own market first.

Matthew Irish-Jones · Answer

@David Evans. Hey Start with your goals, and available Capital.  Pick a market you can afford and meets your goals.

The team you out together will be more important than the market you pick.

Corin Prendiville · Answer

I would probably start by buying your own property to live in and house-hacking it. Decide where you want to settle down for a little bit and get into a house and rent out the spare rooms, if you can afford a 4 or 5 bedroom this strategy can be very lucrative. Once you are ready to move to the next house in a year or two you just get a second owner occupied loan and continue renting out the first house either as a full house or house-hack it while you don't live there. There is so much data to analyze when it comes to selecting a new market, but places with high growth, good landlord-tenant laws, lower taxes, and purchase price are all things to weigh and consider. No market gives you everything and you can make money in every market it just depends on what strategy you are using and what your preferences are for strategy.The only time I would not recommend a house hack is if you live in a place like San Francisco and are planning your escape in the next 5 years or something, in that case select a market you want to live in when you leave and start buying rentals there while you rent somewhere in SF (or better yet live in a spare room in SF).

David Evans · Answer

@Canesha Edwards

Thank you! I'll take your advice on the secondary markets!

Wale Lawal · Answer

As an Investor-Agent myself, I have had several conversations on this topic with my clients and customers. Everyone has different goals and investment criteria, so this is not a one size fit all kind of situation.

I will suggest that you clearly define what you what and do some research then go from there.

A local Investor-Agent can help shorten your learning curve and save you a lot of headaches as they tend to understand the market better. You can also attend a meet-up in your area and ask what areas local investors are trying to invest in.

Use these sites for more information:

Use Niche.com, Greatschools.org, and Msc.Fema.gov for your research.

Good luck and make it happen!

How to Narrow Down Markets

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