Hipster believes that where you shop for real estate makes a world of difference. That’s why we don’t always advocate backyard investing – your market simply may not bring you enough of an ROI to make it worth your time and effort. When you do find a market that can give you the ROI your bank account deserves, it’s important to not dismiss it just because of location. For example, Hipster is based out of beautiful California – however, we love investing in Houston, Dallas, Chicago, Philly (and, of course, Nicaragua).
How do you shop, anyway? Local? Online? By mail, even? We get the whole shop local movement – and it makes sense for some items. However, in real estate investment, shop local doesn’t always apply. Why? Real estate investment is more of a boutique thing – and the right boutique may not be in your neighborhood. There are so many different factors that influence a decision about where to shop – whether it’s for real estate or shoes. You can buy shoes – and real estate – locally or long-distance (and online). Sometimes when you shop online or long-distance, you get a whole lot more variety for a whole lot less. Here’s your quick guide on how to assess your local market to ensure you get the most ROI you can!
Does The Economic Outlook Fit?
What is the market’s economic outlook like? How many big employers are out there? How many people do they employ? Are they expanding? Are they downsizing? Look up recent articles on these employers to find out how they’re doing – are they healthy? Are there colleges in the market? Are the colleges small liberal arts schools that may shut their doors or are they thriving tech and business schools that promises lots of students/renters for generations to come?
Does The Rent To Demand Ratio Fit?
What are the neighborhoods like? If the area is flooded with investors looking to rent properties – just like you – you may want to keep on looking. A great way to assess if a market is flooded or not is to either connect with an ace property manager in the area or to do some legwork of your own. For example, check out local rental listings. How long have they been posted? How many are there? What are the rents priced at? When apartments go quickly, it’s a good sign of a favorable rent to demand ratio. When listings linger, it’s a wise idea to take pause and think twice before investing.
Does The Buy-In Price Fit?
Of course, this one is a biggie. A market could have all the right fundamentals, have a healthy population of big name employers and top notch universities, and a real need for rental units -however, and this is a big however, if the buy-in price is too high, it’s too high. There are enough markets out there, and enough great deals, that there’s really no reason to get in over your head and buy a property that just won’t make dollars and sense for you.
There’s obviously no perfect combination of numbers and considerations that make a market absolutely perfect for any single investor. If there was, well -we’d be the first to tell you! That being said, there are markets that come with significantly greater appeal and ROI’s than others – and it’s important to remember that whenever a property or a city seem like a good deal at first. Be sure to assess if the market is a good one – and to enlist help if you need some. We’re always here to chat with you about any thing you may be considering, so always reach out whether it’s through email or social media. We have an ongoing roster of markets and suppliers whom we love, and we love talking shop!