This title ought to grab some attention as every investor is looking for the next market with deals that work. The best part is what I’m going to share is easy to understand.
How to Find Good Real Estate Markets
In the current market prices are hot and demand is strong. The more condensed the area the higher that pressure seems to be. Even with the effects of covid pushing people further from city centers.
Shooting outside the target
Picture a bullseye and picture a major city or even mid-level city as the target. Examples such as St. Louis MO, Indianapolis, IN and Tampa Bay, FL.
Now picture the rings on a target that go around the bullseye. I want you to aim for the second ring out. You may be wondering what the heck I mean by that.
Picture the bullseye is St. Louis MO and the first ring is the immediate suburbs of that city. Then the second layer is that next level of suburbs, possibly it even has a little bit of rural mixed in.
That is a market to explore, it is what we call a tertiary market.
Fortunes in the tertiary markets
These markets have several key ingredients that allow you to identify them, ingredients that provide a good mix of demand and growth.
This is the basic criteria:
- An hour away from a major airport
- An hour away from a major sports team
- An hour away from the large city center
- Growing population
- Crime rate at or below national average
The first three are geographic criteria and the reason for them is simple. Majority of people don’t want to drive more than an hour to fly somewhere, thus the further you push away from a major airport the more the population drops off, hence rural areas existing.
Also, people like their entertainment. If you want an area with lots of working families, well you will find them an hour or so from a major ballpark. That distance still makes it reasonable to go to a game.
This also holds true for the city center. If husband and wife want to do date not and see a show or concert, anything more than an hour makes it less desirable and not worth the hike except for rare occasion.
With that said, you need the population to prove these items correct so check the stats to see that it is indeed trending higher. More population leads to more demand, thus buying pressure for prices.
The last criteria holds true on a whole, areas with high crime are generally not places where population is growing and families want to move too. That isn’t to say an area cannot gentrify, but that is a whole different type of market analysis.
As people continue to push out of cities and out of those first layer suburbs the tertiary markets should continue to grow. It is a trend that was in place before covid hit, that was just an accelerant.
Be sure to run your numbers on potential deals, regardless of market. Use the calculator, click here.