Where to buy my first investment property?

Real Estate Investment StrategyProperty InvestmentTools and TipsAnalyze Markets
Siva Kolappa
Siva Kolappa
Posted On : 05/17/2019

Successful real estate investors looks for specific indicators when deciding on markets to invest in. In this article, we will discuss what those indicators are and how to use them.

Population growth

If there is only one metric to look at before deciding to invest in a market, it is population growth. Where there are more people, there are more renters. An increasing population is the best indicator of a healthy and vibrant market. People generally tend to move where the affordability is good and the opportunities are plenty. An affordable market with plenty of jobs creates provides the investor with a vast rental pool. As an investor, you want to be in markets where the historic and future population growth numbers are positive and trending up and to the right. The census bureau is a great place to look up population data. As an example, in 2019, Phoenix and Dallas- FortWorth metros are experiencing high net migration. So, those would be great markets to get into, provided they also meet the second criteria, which is ..

Diverse economy

No one trick ponies. Markets with diverse economies tend to be more stable with respect to rental pool and high rent generation. For example, a market with jobs in multiple sectors like manufacturing, technology, banking, retail, and health care is a very attractive market from an investing perspective. This way, if one specific industry has a recession, the local community can still fall back on other industries for jobs. Bureau of labor statistics is a great place to look up job numbers. A market that is experiencing healthy population growth rate and a diverse economy is a very good market to buy rental properties if it also meets the third criteria, which is ..

Cash flow potential

A property is deemed to be positive cash flow when the rent covers all expenses and then puts some money in your pocket. Cash flow positive properties makes ownership easy and immune to market cycles. So, look for markets that have the best cash flow potential. Investing for positive cash flow is a safe way to grow long term wealth.

In summary, we recommend that real estate investors take a data driven approach to real estate investing. Get into markets that exhibit a healthy population growth rate, has a diverse economy and offers plenty of cash flowing properties. What if a market that exhibits all these traits are far away from where you live? You could still own and operate in such markets and we show you how in this article.

Below are some markets that rank high when analyzed using the above technique.

Watch this video to learn more about how to analyze residential investment markets:

Kristopher Franks
Kristopher Franksa year ago
Totally Agreed. I like DFW due to the diversity of the economy. Even during a recession, business still moves along here at a good pace. Folks are still buying and leasing. We have benefited in North Fort Worth area from Lockheed and its affiliated vendors. Received a lot of tenants from American Airlines over the years as well.