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When you’re researching potential real estate markets to invest in, what do you look for? We all know the basics:
- Look for below-market value.
- Find areas where rentals cash flow well.
- Look for affordable areas popular with renters.
This leaves a prospective investor with a lot of areas to choose from.
The truth is that the U.S. is an incredibly diverse collection of real estate markets, and it will take you time and patience to really drill down into local market detail to identify the areas with real potential.
Of course, you can choose to outsource the research to a local real estate team that will present you with investment options. That can be great if you don’t have the time to do your own research or if you are a complete beginner and want to minimize risk.
Having said that, the downside to this approach is that you will only have access to a limited range of options that the local team will show you. Doing your own research will require a lot of time and effort—and there is always the possibility of making an expensive mistake. In my experience, though, putting in the work pays off in the long run; you just need to learn to think outside the box.
Here are the less researched, less conventional things I look for in a real estate market before investing.
1. Properties Are Just About Affordable for My Budget
As a real estate investor, one of the first things you’re always told is to set a budget and make sure to stick with it. The question is: Do you then buy 10 cheap properties with the money you have or two higher-end ones? How you answer this question will determine where you end up looking for properties to invest in.
Look for areas that you can just about afford at your price point. That may mean buying fewer properties, but the choice will come with more positives in the long run.
Yes, cheap is good….