Market Knowledge - How to evaluate a market

6 Replies

Hello! I am so stuck on which websites I should use to fins my market research. I have used so many sites and still do not know which one is the most accurate for each metric I need. I would like this information for specific zip codes versus the state or the city. Please help me and tell me which website you use for each 1) Median Sales price for  specific amount of bedrooms/bathrooms (ie: median price of 3bd/2ba) 2)rental ranges 3)economic development - is it growing, declining, or stable? 4)Interest rates 5)market demand - buyer, seller, flat? 6) average age 7) avg DOM. Thanks in advance. It is overwhelming being a newbie. Any advice anyone can give about studying  a specific zip code will be so appreciated! THANK YOU!

city-data.com is amazing for macro related economic stuff as well as just getting a feel for an area, I'm pretty sure it lets you input zip codes

zillow.com obviously......  That's great for data points on market rents, among other things

I think those 2 will get you the bulk of the way there

@Bria Johnson

@Bria Johnson

For CapEx over time, we use a simplification that's easy to do.

We just assume that we will be at 15% of RENT revenue for total allowance for deferred maintenance, and vacancy allowance (all together).  It's a rough, cover our butts (plenty conservative) and simple enough to even often run the general calc in our head as we are looking at evaluating projects.

I know different people do things differently in this community but we like that.  

EX: Place rents for $1000/mo, we'd have $150/mo allowance there.

@Bria Johnson you can definitely find a lot of this information online. But my feeling is that online research is just step one.  Step two would be to discuss these topics with a reputable local real estate broker.  There's so much information/misinformation online that confirming your initial conclusions with someone that has first-hand market experience and knowledge is critical.  Both sources will be important as you prepare to jump in.  Best of luck to you!

Chris

@Bria Johnson , for capex and repair reserves, I would not base a number on rent but put a fixed amount. If we are talking about the roof, water heater, kitchen cabinets, there is around $110 per month needed for repairs you get only every 20 years. 

The older the house, the more likely that these expenses happen soon. You might get lucky and not have any of these expenses if the house appreciates and you sell in the next ten years.

Besides low-frequency items, you will need to redo carpets, paint and change appliances, and that will depend on your tenant turnover. So that could add $200 per month, especially if the house has carpet.

The bottom line is that you see $500-$1500 per year on your properties but whenever a tenant leaves who stayed for more than four years, that you have a bill of $2000 paint and $2000 carpet (hence the appeal of luxury vinyl planks).

That's why it is much harder to break even on a $750 than on a $1400 rent.

Let us know what you find ^^

See https://www.biggerpockets.com/renewsblog/2015/03/0... and https://www.biggerpockets.com/forums/88/topics/240...

I would be interested if other BPers know of other deep dive capex articles.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you