How to find best market to invest

Question

Hello,

I am new to real estate investing and I am trying to figure out where to invest. I currently live in south Florida where the prices of homes are at their highest. Now I’m looking elsewhere to invest my money. What are the best strategies to determine where to invest in properties? And how do I get in contact with someone there once I find the best market?

Thank you!

Cassi Justiz · Answer

There are a lot of different strategies to decide on a market. Some people go based off of places they know or have traveled to, while other people look into numbers. I would look at city growth, market stability and rental price points to purchase prices. If you can find a rental market where the 1% rule is easy to find, you should have good returns! You will also want to consider how much money you have available to invest. If you are looking for a 15k initial investment, you will need to be in less expensive properties than if you have 50k to invest per property. In Oklahoma (and a lot of other midwest markets) you can get solid C class rentals for under 80k and meet the 1% rule all day. Or even go up to new or newer construction houses with high end finishes in great school districts for 150k and still cash flow. It's all just personal preference.

Once you narrow those kind of things down, just start looking into the forums. There are people talking about their deals and favorite markets. Once you have a few markets in mind, you can start looking at the local forums. There are usually a few really active people. You can reach out to them to see who they are using to find their properties. You can go MLS, turn-key, wholesaler, etc. There are a ton of options. Again, it will all just depend on what your goals are and who aligns with those kinds of goals.

Best of luck with your search! Feel free to reach out if there is anything I can help with!

David Danforth · Answer

A good book regarding research on a national level for multi-family is "Emerging Real Estate Markets" by David Lindahl. It specifically covers how to identify emerging markets by researching indicators like population growth, job growth, geographical growth areas, absorption rates, etc.

Alyssa Dyer · Answer

@Dale Graham I'm with Cassie! Look for a market that makes sense for you. We're both from Oklahoma, so there's some bias, but I've seen hundreds of out of state investors start here in just the last year. It's definitely a market to evaluate.

Winn Merwin · Answer

@Bryan Clement @Kenneth Mooney

Bryan, you may be missing out on a great opportunity in Augusta, GA. I own a few rentals in the area and 1 out of 12 renters I have had was military (and they have been a great tenant). There are great neighborhoods all over the area that are growing for many reason outside of the military. Augusta is a fantastic area for retirees to settle due to the low cost of living and excellent access to health care. 5+ hospitals in a smaller town. The baby boomers are also one of the fastest growing new renter segments of the population on the whole. The military community and VA hospitals makes it an even better place to retire for former military members (who are not going to get shipped out and void a lease).

There is a growing college and medical school near the heart of the city which is where most of our renters come from.

The new jobs coming to the area also are creating the appreciation we are seeing. It is a great market if you can get to know it.

Kenneth Mooney · Answer

@Bryan Clement I am obviously biased. However, I think you have to look at the specifics in any market. Also, let me just say that I’m optimistic in nature so I do feel like that plays into my thoughts surrounding the Augusta market.

There are roughly 5-8k jobs coming into the market, which is a ton for a smaller market like Augusta. If you look at the overall size of the Central Savannah River Area though it has a very small impact to the overall population (meaning there are other people besides military to rent to). Obviously your concerns regarding PCS orders and high turnover are legitimate when concerning military personnel. However, I think you’ll find you hold less than a 10% chance of renting to a military person that gets PCS orders if you look at the larger portfolios in the area. Now, you can greatly increase or decrease your chances of getting military personnel depending on location that you invest in.

The upside that the investors have seen in Augusta have seen that past 5 years, and that I personally think you will see in the next 3-5, is insane appreciation (for the Augusta market).

Anyways, I’m obviously very pro-Augusta as I am a native but just love to hear differing takes on the city as at the end of the day nobody really knows what’s going to happen here!

Jonathan W. · Answer

@Dale Graham one reason I don’t believe in communism is the scarcity of knowledge

A gas station owner in KC knows how to run his business better then a central government bureau. Although the government would know a lot and have resources, they don’t know what the gas station owner in kc knows.

My point is you gotta do some savvy research. Find out things, take the effort. You can’t just google it but my suggestion is look into where companies are expanding. Find out where headquarters are being built and where jobs are moving in certain industries

Look for business friendly states( ie Texas/Nevada)

Look at where manufacturers who want to relocate may be looking.

It’s information that takes effort to find and once you find it, I’ll promise you not many others will know and you’ll have yourself a great investment opportunity

Ali Boone · Answer

Very cool! I don't BRRRR so I can't really offer suggestions on that, but I'd start by just figuring out where the cash flows are and what kind of property types are solid for which markets, and then dive in from there.

Kurt Michaelson · Answer

@Dale Graham While I wouldn't discourage you from investing out of state, why wouldn't you consider finding a way to begin achieving your goals in your local market?

I realize the market is high in South Florida, but that doesn't mean there aren't any opportunities that might help you get started.

In addition, you may want to re-evaluate your ability to invest long-distance, since you're new to the business.

Just as @Bryan Clement suggested David Greene's book, I would as well. The more you know the better prepared you will be to implement that type of investment strategy.

Welcome and all the best to your success.

Patrick Britton · Answer

@Dale Graham the answer depend entirely on what you consider "best."  You should also ask yourself if you just want a few properties to supplement your income, or are you looking to get a massive portfolio to replace whatever employment you have right now.

Bryan Clement · Answer

@Dale Graham I am rather new but my advice is to read Long Distance REI by David Greene. I am in the middle of it now, his advice in that book has been spot on so far! I was looking to get into Augusta, GA at one point, but his research showed me a few things I was missing. Still might be a good area, but now I have a more educated approach. Let us all know how this goes for you!

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