What Things to Know About A Market

Question

Very commonly said investors need to know their market. Usually followed by an "etc." and fall off thoughts, but pretty elusive.

For Apartment Investing what specific things do I need to make sure I know so I can be confident that I know my market?

Ellis San Jose · Answer

How about...(not a complete list)

Occupancy rate, market rents, cap rates, value trends, expense ratios, regulatory issues (rent control).  Local economy, major employers, crime rate by area, appreciation history, default history, possible environmental hazards. Future infrastructure projects & development plans.

Local labor costs, tradesman & contractors, lenders, other investors & competition.

Good & bad management companies .

Tim Ryan · Answer

1. Job Growth

2. Local government committed to growth

3. Desirable area to live and lower cost of living

4. Not over built (yet)

Now, to answer your question: You will never really know the market until you go to the market periodically. I know living in HI makes that a bit more difficult. However, my markets are 2500 miles away from my home (I own over 200 multifamily units). Everything changed for the better once I started going there at lease quarterly. Off-market deals come when the local brokers and sellers get to know you personally (and like you).

Something I have done is I found a market and worked that one market. I know everything about the area, the properties, the brokers, vendors, etc.  I have seen investors jumping all over the country and never really know enough about any of them.

Good Investing!

Michael Arrieta · Answer

@Ellis San Jose Tim Ryan Much appreciated guys. So the more I stick to a market the better I learn all these facts. I like it that's really helpful and clarifying.