Ok, how to pick the best market for your real estate investing business? Seems to be on top of everyone’s mind when they’re getting started. After all… the old real estate saying goes… Location, location, location. Should I work in my own back yard? Should I work virtually? As we are humans… and it seems the grass is always greener on the other side, right? And then there are countless questions to consider…
How many people live there? I like cities with at least 500,000, but that’s me. Some like more, some are very okay with less.
Is the Population Growing or Shrinking? An important consideration when you’re looking to buy and hold. What you really want to see is a net positive migration where the number of people moving in to the city is more than the number moving out. This is a pretty good indication that the city has something to offer to attract more potential tenants.
What's the Unemployment Rate? If people don't have jobs, they can't pay much for rent. Look for diversified industries. Look for Fortune 500 companies, the more the better. How Much Crime Is There? This is a little tough to discern. Every market is made up of smaller microcosms and has both high and low crime areas. In the majority of the country, the crime rates vary from neighborhood to neighborhood and even street to street. Is It a Landlord Friendly Area? How Much Are Property Taxes? Do More People Own or Rent? What's The Price to Rent Ratio? Are There A lot of Vacancies? How do all of these numbers compare to the national average? How Many Homes Are on the Market? How many transactions are taking place per month? How Long Is It Taking houses To Sell? Are Sellers Getting Their Asking Price? Who's Buying All These Houses?
There’s nothing wrong with asking these questions and getting answers for them… in fact, it’s prudent to do so. The problem is… what do you do with the answers once you have them? And the big potential problem here is… you get stuck via analysis paralysis. I like to err on the side of imperfect action as opposed to perfect inaction. In other words, you can’t steer a parked car.
Here’s the thing when it comes to deciding which market to work in… the best market to work in is the market that you’ll actually work, work consistently and work with persistence. And here’s why… as real estate investors we make our money when we buy… meaning, we have to buy at a discount. With 95% of all real estate transactions happening in the public forum known as the MLS… all of these transactions are happening in the neighborhood of retail value.
Yes, I know… there are exceptions… and in addition, it depends on your goals… but humor me here… we’re looking for the 5% of deals that are sold at extreme discounts. We’re not looking for people that want to sell, but people that NEED to sell. And people NEED to sell due to some sort of distress, and there are 3 types of distress… financial distress, personal distress… and property distress. Basically, life happens to people. And it happens to people in every market and neighborhood… regardless of financial or socio-economic status, and with that being the case… what we teach here in the Epic Pro Academy will work in any market. So, you can go into deep market analysis and try to zero in on the perfect spot… or you can start making some money now and make adjustments along the way. So… here’s what I recommend…
1. Make sure there are houses in your market… and make sure people live in them. As a guideline… try to stay within 60 miles of your primary residence… focus on 3/2 SFRs… in your blue collar neighborhoods… or neighborhoods just under the median price. There’s typically going to be more turnover there… of which translates to more opportunity for you.
2. Identify people in the three areas of distress I mentioned before… Financial, Personal and Property Distress.
3. Create your message that demonstrates you can cure, or improve, their distress, and don’t forget instructions on how to contact you for that cure.
4. Deliver that message to your distressed audience… and automate that delivery.
5. When they contact you… interview them to see if you actually can alleviate their distress and solve their problem.
The point being… you solve people’s problems. People with property experience problems every day, in every market. There will never be a shortage of problems for you to solve. Real estate investing works in every market of which there is real estate. There’s real estate there because of a real estate investor. The very best market for you to work is the one you’ll actually work, work consistently, and work with persistence. Don’t over think it. Get started, and make adjustments along the way. Imperfect action beats perfect inaction every time. You can’t steer a parked car.
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