Metrics for selecting locations to invest in

6 Replies

What are your best criteria for selecting locations to invest in? Do you have a minimum median income level in the county or a certain poverty rate? Please advise.
Originally posted by @David Mohrmann :
@Joe Villeneuve do you have any preferences on the local demographics metrics? A certain population growth, median household income, etc?

 Yes...none of them.  It's not that they are not important.  The problem I have with them is how to interpret them.  Besides, the numbers with $$$ in front give me the answers I would have wanted anyway.  If the residents like the properties, it shows up in $$$ in potential profit and cash flow.

My properties are max one hour from home so I get to know an area pretty well. And I am small time(for now) I work out average rents by street and building and what improvements that might be justified by additional rent. In this market adding properties is difficult; I am finding MF is way over priced and not enough CF, at least not for me. So I am spending more time fishing.

@Joe Villeneuve  - I respectfully disagree. Socioeconomic, Macro and Microeconomics are crucial variables to monitor and watch. Simply looking at financials is frivolous and dangerous and such recommendations threaten the longevity of his wealth. 

Yes, absolutely yes, review items such as crime trends, median income, unemployment figures, non-farm payroll figures and growth respective of that, school system health, general GDP growth of the prospective market. What is happening with the local economic development chapter and can you piggyback off of those upcoming projects by buying ahead of those? 

For Example. Oklahoma has a school system that is on the brink of complete failure and with it's current political realm and laws protecting change unless 75% of house members pass a bill, they are in deep deep trouble. Yet, the financials look ok... for now. That is a state I wouldn't go anywhere near as I believe a mass exodus is coming and likely an influx of migration to its neighbor Texas, which has highly ranked schools. Teachers in Oklahoma make less than those working at Wal-mart. So, without doing your research you could buy in a terrible time without understanding major downsides. 

Point is, 100%, review crime trends, GDP, population growth trends with Millennials, (after all, by the year 2030, they will be our largest population segment), school system health and respective proposed budgeting from the state govt and general macroeconomic conditions. Financials come right after and make sure the numbers yield decent to attractive returns. 

@David Mohrmann