Rental Market ID - What do you prioritize?

Question

When evaluating markets for rental properties, there are a lot of factors to consider: population growth, employment rates, rent to price ratio/GRM/Cap Rate, rent trends, vacancy rates, etc.  It's hard to find a "perfect" market that is knocking it out of the park on all these parameters.  So, what do you prioritize?  What are your non-negotiable factors vs nice to haves?

I'm new to investing in rental properties and I live in one of the most expensive markets in CA.  So, I'm looking to invest in other markets and trying to focus on one or two so that I can build knowledge over time, but narrowing it down is a challenge.  Interested in advice from those of you who have evaluated markets you don't live in.  Thanks!

Nicholas L. · Answer

@Lauren Merendino

I strongly believe that your chosen market should be somewhere that you can go to in person / have strong personal knowledge of / have family or a network in already.  So - somewhere 2 hours away, or somewhere you like to vacation in, or where all your family lives, or where you plan to move someday.

Too many people are trying to do exactly what you're doing - pick a market based on a formula - and they end up buying a random 'cheap' property thousands of miles away, turn it over to people they've never met or even spoken to, and then... lose money.

So... you tell us.  Where are those areas for you?

You could also consider house hacking locally.  It's still possible.

Hope this helps.  Happy to help further.  I invest primarily in a lower cost area but also own property in, and am looking in, a higher cost area.