How do you choose the real estate market to invest in?

Hi everyone!

I wonder how people are choosing the real estate market to invest in? I’ve recently read an article where are named such criteria as demand, rental rate, and HPI. But I am curious what criteria are important to you. And do you consider those I named?

Let’s discuss!

That’s not the first question you want to ask. You want to ask yourself what you want to accomplish with real estate investing.

For example, do you want to establish cash flow, long term appreciation, retirement income, or what?

Each of these investment goals requires that you focus on a different niche of real estate. And different niches exist in different locations.

That said, you generally want to stay away from areas with high vacancies. These areas nearly by default offer fewer employment opportunities; have higher crime rates; and otherwise, make management more expensive and intensive.

HOWEVER, bargains can be had ANYWHERE, and in ANY MARKET, if you’re willing to spend the time and energy familiarizing yourself (as in becoming an expert) in a given market, and are able/willing to act fast.

The most time-consuming effort in real estate is finding the deal. The rest falls from there.

Meantime, again, first settle on what you want to accomplish, and then focus on the market that will make it happen.

Here’s some hints that will give you some direction based on your goals. This is not exhaustive, and there a ton of exceptions, but is generally applicable.

The assumption to any of these options is that you are buying real estate that is either under-performing, and/or needs improved management, maintenance, and/or marketing. If the property is ‘pretty,’ likely you’re gonna be waiting a while to make any money, if any. Just saying.

Bread-and-Butter Multifamily Units (Working Class) (30-unit minimum, if you want to avoid donating your own time to management and maintenance. (Leverage: If you can raise the rent $40 per unit on say, 30 units, that represents a $14,000 increase in your annual income! And goes directly to your bottom line.)
Long-term Appreciation: Bread-and-butter, single-family houses (Quite forgiving if you make a mistake here, since the price you pay becomes more irrelevant over time. It’s about your ability to service the loan until the property begins to cash-flow. Some say, ‘you make your profit when you buy, not when you sell.’ I say, ‘you want to make a profit on both ends.’
Short-term/forced Appreciation: Rehabbing, any price range (Buying the worst houses in decent neighborhoods)
Wholesaling: Flipping the worst houses in the worst neighborhoods to rehabbers.

*** You’ll find a lot less competition for deals in outlaying areas of town. Getting off the beaten path can deliver great opportunities.

That’s all I got for now.

So, what are you wanting to accomplish by investing in real estate?

I pull lots of data like population growth, unemployment, median incomes etc. Looking for where these are increasing. I then narrow down the list and start to look at infrastructure spending, growth around the areas etc. I like to buy where there hasn’t been a lot of growth in the area but the numbers are trending the right way and the areas around it have grown.

I take a much lazier approach to it…

Where I’m located (Winnipeg, Canada) we are the only major city for about 6+ hours any way you drive.

Fundamentals are quite good in the City, slow and steady growth, diversified economy etc.

So, I am happy to invest in my back yard since the fundamentals are good and no other major cities are located close by.

Within Winnipeg, there are many different neighbourhoods with different characteristics so I can select neighbourhoods to invest in that I think are well positioned for growth.

Look For A :

Median Property Price That Fits Your Budget

Average Performance of Traditional and Airbnb Rental Properties

A Growing Economy and a Diverse Job Market

Population Growth

A Low Crime Rate

Affordable Property Taxes

Favorable Landlord-Tenant Laws

Something I’ve heard lately is that people are worried about climate change affecting the state of Florida in the next 50 years…
Is this something to be considered or is it hooplah?

Are you old enough to remember the warnings of ‘Y2K?’ Or the “Year 2000” apocalypse? That’s what ‘climate change’ amounts to.

I went to a real estate club meeting in Anaheim in 1999. The organizer was selling a book about how to survive Y2K. Of course, someone asked him if he was ‘seriously’ worried about the year 2000. And he was assuredly concerned, because he was buying a cabin in the mountains in preparation. (Sure, bud.)

Come to find out, he was not buying anything in the mountains, but it sold books, and some of the sheep were eager to take it all in, hook, line and sinker.

Never mind, here we are, and zero happened in 2000 to bring about the apocalypse.

So, the moral of the story, if you’re really wanting to know about genuine apocalypses, they’re described in what is called the Book of Revelation. Go crazy.

Back in Florida, you want to find all the gullible Floridians who believe Bill Gates (and all the other leftist doom mongers), that Florida will become either the next Sahara desert, or the worlds largest underwater state, and get them to sell to you on the cheap. You know, before their properties become EZ-Bake ovens, or coral reefs.

Then …flip those bargains to normal people. The ones who breathe with their mouths closed. Then rinse and repeat, until you’ve made all the money you want.

Haha thanks for that response!

I am only 25 so those are not concrete memories for me.

The climate change, Florida going underwater theories don’t bother me. Just curious if others thought there was any substance to this.

Maybe it will help us get properties for cheaper haha

Choose a profitable location for a real estate investment with confidence.
1.these markets are on the rise.
2.With the population moving upwards and trending well.
3.these markets are booming.