Brownsville Oil refinery news

[Evan Grant]

Greetings community!

I'm a new investor, leaning towards out of state investing, building my knowledge, stuck on deciding which markets seem to offer desirable rent to price ratios, and forgiving entry points for purchasing my first property.

Are there opportunities in seemingly large government-based announcements, with regard to home prices, rents, job growth, etc? Is it unwise to consider such markets, especially as a new investor? I am certain that the answer is yes, but I'm keen to hear the thoughts of experienced community members. This Brownsville announcement seems worthy of discussion, if nothing else.


- Evan

[Eric Fernwood]

Hello @Evan Grant,

The proposed oil refinery in Brownsville will likely bring many people to the area; the question is whether these people will rent or buy. That depends on their income and local home prices. An example may help.

Our target demographic in Las Vegas earns between $60,000 and $85,000 per year, while single-family homes cost about $380,000 or more. People in this income range either cannot or choose not to buy homes, so they remain (almost) lifetime renters.

Once income exceeds about $90,000 per year, most people are home buyers, not renters. So if most of the people moving to Las Vegas earned $90,000 or more, they would likely buy homes instead of renting. Thus, there would be little impact on rent rates.

You need to understand the demographics of long-term renters in your area. Then, determine if a significant number of the jobs created by the oil refinery will be renters or home buyers.

Everything Depends on Your Goals

If your goal is long term financial independence, your rental income must meet several requirements.

• Rents must grow faster than inflation. You need rent growth to outpace rising prices.
• Personal incomes must grow faster than inflation. Rent cannot rise faster than inflation unless personal incomes are also rising faster than inflation.
• Rental income must continue for decades. This requires tenants to remain employed at similar or higher wages. That means investing in a city that continues to attract companies and create new jobs throughout your lifetime.

Where Should You Invest?

The investment city determines long term rental income performance. The expression, “Live where you like, but invest where you can make money,” reflects this reality.

Most investors do not live in a city that meets the rental income requirements I stated, so they invest remotely. For example, out of our 170+ clients, fewer than 10 were local. The rest live in other states or countries. They invest remotely because the cities where they live do not offer the same long term opportunities.

Remote Investing Requirement

The most important requirement for remote investing is an experienced local investment team. Everything you learn from books, seminars, podcasts, and websites is general information. In practice, you will invest in a specific city, buy a specific property, and deal with local rules and regulations. You will also need reliable local resources. The only place to get that knowledge is from an experienced local investment team.

Evan, I hope this helped.