Learn Your Market
Knowing the market you invest in is critical. There are a lot of things you can change with a property – you can paint it, fix it up, convert it to a different use, etc. The only thing you can’t do is change the location. You can’t pick that property up and follow a market condition, or jobs, or population growth. That’s why knowing your market is so important.
Lee Iococca said, “There is no substitute for accurate knowledge. Know yourself, know your business, know your men.”
So how do you get to know your market? Look at a lot of real estate and study the demographics.
Previously we discussed analyzing deals quickly with Michael Blank. Michael quickly learned you must analyze a lot of properties to find a good deal.
In order to look at a lot of deals, you need a tool and system that will help you funnel deals through your pipeline. There are a lot of free tools and calculators out there that can help with this, or you can create your own.
Next, you need to understand your market. What drives the economy? Who are the major employers? Is the market growing or shrinking? Which parts of town, or sub markets, make the most sense for investing?
You know the saying, “Practice makes perfect.” By analyzing tons for deals, you’ll become familiar with your market and be able to identify opportunities. You’ll become in tune with prices, rents, cap rates, demand, typical amenities, etc.
By understanding the demographics of your market, you’ll be able to confidently invest in the market. You’ll have a better feel for the future demand, job growth, population growth, etc.
You must analyze specific property types which you’re interested in buying in your exact market. Real estate investing is a local game. You can’t compare duplexes in Miami to duplexes in Nashville.
Start analyzing deals now, so that when you’re ready to buy, you have familiarity with the market.
Get out there and study your market. Learn everything you can about it. When the right opportunity presents itself, you’ll be well equipped to take action and make a sound decision.