You’ve probably heard it said that the three most important things in real estate is: “location, location, location.”
So if you’re an investor looking to invest in the Pennsylvania market, you’re probably asking which location within Pennsylvania should you be investing in?
Try as you might, there is no definitive answer that works for every single investor. Lots of investors want someone else to tell them where to invest but it really depends on a number of factors. However, here is a strategy to help you identify which markets are right for you:
Get a map of the state and find your location.
Consider where you live, too.
If you will be managing the property (either during the renovation or on an ongoing basis if you are renting the property) then you’ll also want to consider your time to get to the property. How long do you want to spend on the road each day? Or each week? And if this is your first property or your twenty-first property, will you still feel that way about travel time? If you will be setting foot on the property regularly, consider finding something closer to you. Mark anything farther away than what you want to travel, and simply don’t look there.
This will help to narrow your search to a realistic arc around you.
Then choose a few cities or towns in the area and continue with this exercise…
Consider which cities and towns tend to have people moving into our out of.
Are any that are growing or declining because of job opportunities?
Decide what kind of deals that you want to do.
At Legacy Capital, we talk to a lot of different investors with many different goals.
- Maybe you’re a flipper who likes to find run-down properties, fix them up, and sell them to a first time home buyer with a growing family
- Maybe you’re a hands on renovation specialist who can transform old century homes into beautiful high-end mansions
- Maybe you’re a rehabber-and-renter who will acquire a neglected house with good bones then fix it up to rent out to a tenant
There’s no limit to what you can do but first you need to choose the one (or a few) that you prefer because that will inform the next step…
Consider where the end buyer/tenant will want to live
Consider what is important to your buyer or tenant. Schools? Parks? Employment? Stores? Bus stops? Healthcare? Every homebuyer or tenant will prefer something different but you can make some educated guesses based on the demographics of the people you tend to sell/rent to. A homebuyer with a family will probably look for schools; seniors might look for access to stores and healthcare.
Watch for major employers whose employees might need to rent. Examples include: Walmart, universities, hospitals and other healthcare organizations, and high-tech. These employers tend to have a lot of employees, some of whom will need to rent.
Consider the kind of structure you work with.
Single family? Duplex? Mobile/Manufactured homes? Commercial buildings?
By now you should have a selection of a small handful of target markets—all cities and towns within comfortable distance from you, where there are major employers and opportunities, where you’ll find the tenants/buyers and structures you prefer to work with.
Start with those areas and begin talking to real estate professionals in the area to refine further.
The truth is: you can find deals in almost every market but to find the deals that right for you in the market that’s right for you, you need to narrow it down to a few markets and then look more closely at just a few markets.
Avoid the temptation of over analysis in the pursuit of “the perfect market”. There isn’t one. There are deals everywhere. The best process is to pick a few markets using the criteria above and get to know those markets well and find deals there.