Successful Real Estate Investing – Looking Outside Your Local Area

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Investing in Markets Outside Your Local Area

I have found that looking at markets outside your local area can be very profitable. Have you ever heard someone say how difficult their local real estate market is to “find a good deal”. Perhaps you’ve heard some say this is just not a good market to purchase real estate. Are they right? Maybe, maybe not. Your local area can be a good area to invest, but your strategy is not aligned with the market. For example, I would not want to buy, hold, and rent single family houses in Detroit using the standard 75% LTV loan. I might, however look at wholesaling single family houses in Detroit. Be that as it may, sometimes the strategy you like to pursue is best suited to markets outside your local area. So where do you invest and how?

One of the best ways of identifying areas to invest is to look for future growth areas. Job growth and employment are both signs of an area that is growing. For every new job created by a company coming into an area, there are three to four jobs created. This is especially true of solid white collar jobs. First the white collar jobs then they are usually followed by several service jobs. You can identify some growing areas by looking at the Bureau of Labor and Statistics at bls.gov. Identify the areas that have increasing jobs and steady to decreasing unemployment. Be sure to look at trends over several years as local events can skew the numbers. Identify several markets that appear to be in a growth phase.

Once you have a few areas identified, it is time to drill down deep into each. First take a look at the local Chamber of Commerce website. Look for clues of recent company moves into the area. Make sure to write down the name and phone number of the contact person as you might need this later. Search the local newspaper and newspaper archives for signs of growth. Look online for type of real estate you are interested in purchasing. Call a few brokers to find out the vacancy rate in the area, how quickly properties are being sold and at what discount to asking price. If they ask what you are looking for let them know you are currently doing a market analysis to present to your partners. There are numerous other resources that can be found online and by making a few calls. Do your research. You are looking for an area that has a declining vacancy rate, increasing employment (including numerous jobs added by bigger companies), and a government that is conducive for business. You will probably look at 10 areas and come up with one or two markets that will work for your investment property type and strategy.

Now that you’ve identified an area, it’s time to build your network and your team. Start contacting brokers in the area. Identify the local expert on your type of property and give them a call. Start having brokers send you property listings via email. You will do the same thing in the areas of legal, insurance, management companies, banking, etc. Identify and build your team and you will be ready in that market to make a move when the “deal of a lifetime” comes your way.

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Source by Dana Lange

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