Decent at analyzing deals, but need market help!

4 Replies

Hello,

My husband and I are new to real estate investing and haven't done our first deal as of yet.  We have committed to analyzing 5 deals a week and have been committed to this for more than 5 months.  I think we have a pretty good handle on this part.  Now, we need to figure out how to analyze markets.  There have been several properties that we really like and fit our requirements, but aren't sure if the market area will support it.  What do you do to analyze a market area?  We aren't restricted on a specific state or region (as we live oversees so all will be long distance investing), but we want to make the right choice as far as area.  We've listened to several podcasts (several times over) and read a couple books, but none have given specific information for determining a target market area.  We are from SE Georgia (Savannah and Atlanta), so we know both those areas fairly well, but don't feel that either will give us the returns we are looking for.  

Also, how realistic is it to think you could get a distressed property for 50% (or less) of the asking price?  David Green as mentioned it several times while on podcast and I always cringed because I think it may be a little more fluff than reality.  What are your thoughts?

Last question (for now), do you have any suggestions for acquiring a loan?  As stated earlier we live oversees.  We have excellent credit and a decent down payment, but have not been able to secure a low interest loan.  We are only looking to purchase a small multifamily or portfolio with a couple SFHs.  

Thanks

@Tiffany Griggs  hello, I read the IRR Viewpoint Report each year to get an idea. This is my interpretation of their report from this year projection. Keep in mind I invest in multifamily so this might be a bit different for you. Also check out Milken-best-performing-cities-report-2017. Search for both report in google and you should be able to find it in PDF. I also dropped this Real Estate Cycle graph just in case if you are not familiar with the different cycles.  I hope this helps

@Tiffany Griggs If you are wanting to get into multi-family one idea, since you live overseas, might be too be a passive investor in a syndication deal. That way you are making returns on your money and learning at the same time how these deals work. As for the market there are a lot of websites you can get info from. Look for expected job growth because people follow the jobs. Hope that helps some.

To figure out a market you need to call some local brokers and network over the phone.  You would want to get on their list also if they have deals that they email out to investors.  Let them know your criteria, and ask them lots of questions about what they would buy. They will also have the best recommendations on local lenders.  There are plenty of US wide lenders you can talk to as well.  Rates are great right now, but also you and 90%+ investors are looking for a "deal" right now.  Counter-intuitive to what I just said, the deals are probably not going to come from a broker unless they bring you something off market.  It will also be real tough to get them to send you that info since you haven't purchased yet.  

-- The market we are in now, in most metro-US cities,  as @Keivan Darius suggests on his curve, is Construction OR EXCESSIVE construction.  This matters a whole lot more if you are buying the big stuff.  You can still buy a small older MF "deal" and make good cash flow.  But good cash flow is relative.  If you are planning on buying older or really anything that needs improvement, that makes the distance game even tougher.  This is where the local broker can really help you. Some have plenty of experience handling project management, which would require a fee or % of the deal.  For you to really push returns you need to push improvements, value added things like attractive remodeling, better curb appeal, and really important good management and maintenance.  

Personally, I am out there searching for self-storage and MF deals. Also looking for them in my own backyard of ATL.  Seems that a ton of folks are out there already buying deals in Atlanta for many reasons, like job growth, product that's only from the 70's-90's, but needs easy cosmetics, rapid rental rate incline that already happened, and just the plethora of gentrification or improvement of every neighborhood  you see whether inside or outside the perimeter of I-285. 

BP will also have some really great blog posts and forum Q&A's that will tell you the current market conditions.  Analyze deals all you want, but if you are not making offers, you won't get anywhere.  The first thing I learned was "Go see a lot of deals, and make a lot of offers." 

In my current search for deals I may come across something and would gladly add you to my list if you like.  Almost everything I am targeting is OFF market.  

I'll echo what @Christal Warren said. If you're living overseas, have you considered buying into a multi-family syndication?

As far as market analysis, look for:

- Good unemployment numbers, dropping unemployment rate.

- Increasing population over the past five years.

- Population growth in the demographic you're targeting. Wouldn't do to invest in a property best suited for people aged 55+ if that population is declining.

- Job diversity. If the city you're investing in is heavily dependent on one type of industry (tourism, manufacturing or retail) and the economy turns, you could find quality residents in short supply. See Las Vegas in 2009, the city's economy was heavily dependent on tourism and construction. The double shock of the housing crisis and the Great Recession hit the city harder than most.

- Diverse employer base. Is the locale heavily dependent on one or two employers? What happens if that employer decides to move their operation.

- Vacancy rate. What's the trend on vacancy rate in the community?

- City government health. Is the city investing in infrastructure? It's a good sign things are going well if they are.

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