How do you research possible investment markets?

Question

I do a lot if traveling between NY and NC. Because of that i am looking into turnkey properties in other states. I figure if i wont be managing them it really dont matter how far I invest. My question is what websites and or other tools  do you guys use to do your research on markets you cant easly travel to? I am looking to learn about median wages, job growth, diversity, criminal stats and the like.

Alex Franks · Answer

Easiest way Is find local folks, who are already buying in these NC markets. Don't try to recreate the wheel. Find out why ,and where it is working for folks. Make sure to take a trip down and see things you self. I done a lot of posting on NC. If you need more precise information PM.

Here was some thoughts on Charlotte, and why to stay away from lower end deals.

The problem with the lower end assets, they are such a more hands on investments , just more of a headache. Which I'm about to tell you why. Yes, on paper the entry price point looks great. So folks are only seeing one side of things. Lower end properties tend to be higher maintenance, higher expenses, and much higher turn over rate. Another factor is the rental prices aren't making sense, while still continuing to rise. We owned 37 of these exact type of homes (lower end in RH SC during the timeframe of 2004 -2009). So I'm speaking from experience, these type of assets tend to burn holes through investors pockets. Most folks start here, (1) Because they do not know any better and (2) The price point is much more attractive. These are what I like to call recycled product ( Quote by "Jay Hinrichs") , which usually has a 5 - 8 year shelf life. Or in better terms " the game of hot potatoes"- who or which investor is getting stuck holding the bag. Easy way to look at things are any institutional, or Hedge funds buying in this asset class. Now they are mostly buying A - B assets. Their is a reason Wall Street, and most private money are parking their funds into higher class assets. Most times this is why newer investors, jump in because its all that is left on the table for them ( lower end )or what the Gurus are selling.

The information above from Cindy is great. I've spoken with Cindy here on BG a few times. I told most folks here on BG and in many seminars that if I sit at computer long enough I can dig a lot of great information up to prove what a great city Charlotte is. We are Atlanta's little teenage brother growing up (fast) We are all lucky to be in a booming city basically still many years of growth left

I have to disagree on this being a good buy and hold market on most markets. From 2009-2013 this was one of the best buy ,and hold markets. Today we are facing an over priced market, rental returns are much less. I have some left over stock still holding from 2009. I was buying from $40k to $50k range. Same house now priced in $100k - $120k pre-rehab price range. I was also buying in 4 states; NC, SC, Georgia, & Florida. With that being said, "one man's junk is another man's treasure." So for out-of-state folks with (ex: California or NY) they tend to have much higher entry points. So buying a house here from $100k $150k with 1% rental rule. Still makes this a very attractive market for out-of-state or international folks. This does not mean we have a great buy and hold. For me personally, it says we are lucky that we still have a lower entry point then most folks markets.

If we jump in and really become bit more analytical. It is cheaper to build than buy today. We will be building new construction rentals for a few years. I am seeing this as  similar to the 2000-2004 market. So the box Vinyl Village type homes is the current build (mixed in with townhomes, duplexes, quads). That mixed with real estate cycles , which very folks even discuss or understand.

Now back to the 10% Cap rate this is why most international folks are going to get burnt, and  USA  folks will as well. When investing in these lower end asset classes, Folks brought in cities like Detroit and Michigan. Promised a 20% return on the properties. I challenged folks to show me that over 5 years period (I am sure those returns are a lot less). Keep in mind this has nothing to do with the homes. It has everything to do with our economy, salaries for the lower income bracket, and a renters mentality. No security in those type of jobs with very little insurance benefits so job changing is common among lower end renters. It is very hard for someone paying 35 to 45% of their income to pay rent. I know here comes that chatter, well property management will handle that, right? We owned a management company from 2009 -2013. We lost our asses with that side of the company. I did it mostly for our turnkey clients. Good Rule of Thumb for any management folks who want to get in the business. Get 300 homes plus or get out of the business. Not profitable with out the inventory.

Now back to low end assets, very rare you are every going to sell, and get retail prices in these areas. How many USA folks move to rental areas? Once a area is over 50 % or more rentals, values will eventually drop as will the area. We have artificially inflated prices, in most of the areas with cash sales to out-of-state folks, or local  cash buyers( who just don't know any better). Basically most people are showing up to the table, and all we have are scraps left! This is not just here; Kansas City, Indianapolis as most markets to just a name a few are going through same thing. I still jump on 3 to 5 webinars month with out-of-state folks seeing what they are selling. So limited sales potential down the road for every one.

I was working with as well as being one of these turnkey groups for a few years. We all setup table and booths in LA, San Fran, and other markets. Selling our cities, and our turnkey deals. Me and a few of the guys we got smart, and jumped into the international markets. I still play there my self and see a strong demand for the turnkey product (just not worth it for me). Folks if someone was to start a local solid turnkey business here in Charlotte NC (5/month ) there is a good demand out there for this product.

Now for the lack of inventory. We had a few smaller hedge funds here in 2011-12 buying before most folks realized. They were already here buying smaller up to 100 homes.. Then the big boys like invitation homes (Blackstone which is a large wall street fund for folks who don't know ) came in purchased 7000 plus homes in little under a year. Most of the vinyl villages, anything built 2000 above; 3bed 2 bath or larger was their focus. Banks are realizing they can go into the property now . Taking a lipstick approach to rehabbing. Sell it them selves as well. So that's a few reason for the lack of inventory.

Just my two cents,-- Alex

James Wise · Answer

http://www.usa.com/

This is a decent place to start.

Cailyn Aune · Answer

@Jonathan Casillas - There are several ways to go about out-of-state investing... and I would say honestly, if you do any of them correctly... none of them are easy. :o) Citydata.com is a great place to snag statistics.

http://www.allpropertymanagement.com/rental-rankin...

With that being said... all of this is a great place to START. Use BP to make a lot of local connections, AND use BP to get references on anybody, any business, any thing. Unfortunately, you have to weed through the untrustworthy to find the worthy. It is essential you do your due diligence. You will find many experienced investors who are happy and willing to share their experiences and help you. IF you decide turnkey is a good route for you... there are a LOT of questions to be asked, and a lot of research to be done. I would ABSOLUTELY say it's a requirement to fly to visit the providers, so you can see first-hand what their product is, and meet them in person. Don't take lightly what @Alex Franks had to say. It needs to be seriously considered, as to whether turnkey is the best route for YOU. Turnkey isn't a hand's off investment either.

I would suggest using @Alexander A.'s list of 31 questions to ask a turnkey provider.... you can find it here!

http://www.cashflowdiaries.com/31-questions-to-ask...

Best of luck to you!

Account Closed · Answer

@Alex Franks That was great feedback.

James Wise · Answer

http://city-crime-statistics.findthedata.com/

You can give this one a go as well. I only invest in Cleveland which is where I have lived my entire life so I don't personally use any of these resources but have recommended them to others such as yourself.

Jonathan Casillas · Answer

This is great info. @James Wise is there any other places you use?

Abhi Golhar · Answer

@Jonathan Casillas - here are a few of my thoughts:

Mike D'Arrigo · Answer

@Jonathan Casillas Most of the higher level economic and demographic information that you'll want can be found at the U.S. Census Bureau and Dept. of Labor Statistics. I've done podcasts and webinars on this topic. You can find them on my website if you're interested.

Alex Franks · Answer

Thank you , this can be a great business ,if things are done correctly. Pm me tell me more about your market, and how your doing. Let me know if I can help you in any way

Alex

Michael Lee · Answer

Hello and welcome to BP!  Check in with the city's Chamber of Commerce or as Agent that is in the area you are looking in. Try to find out if the economy is flexible/diverse and.try to find out if the population is growing.  The closer to the city your property is in, the better.  Look for a Turnkey Investor that is experienced and has good customer service.  Somebody like Memphis seems to be stressing the important things.  Amongst the places they are in Dallas and Memphis.  I do not know much about Memphis but I am from and was raised in Dallas Texas.  Teaxs seems to be a good place to be in. It has been growing in all phases since I was born and that was in 1956.  Experience is critical on management companies.

I am 59 years old and I found BP about 6 months ago and I am still trying to decide what to do.  Since I had a brain annurism and a stroke I am looking to do something that is flexible.  I got a college degree in business that emphasized real estate.  After I graduated, in 1980, I got a broker license because I was already eligible for it without taking any courses.  Regardless of what I had I felt more comfortable in the construction business.  I have been in the construction business since I was 17.  My father has been in real estate for about 35 years and he has taught me a little bit.  I have only been in one investing deal.  I no longer own that.  I closed several deals foe other people. If you think I can help you please contact me through BP at any time.  Good luck!

How do you research possible investment markets?

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