How can investors better analyze new real estate markets?
Real estate investors are moving into new markets. Some are branching out for increased volume. Others are hungry for higher returns. Many are investing out of area, or even across borders. Mainstream media, and local Realtors’ websites aren’t always the best source of accurate information. Deciphering published real estate data, and employment statistics can be challenging. So what are some ways to hack the market and gain a better feel for what is happening? How do you know if demand is high? How do you know if homes are selling fast?
Try out some of these unconventional tactics to analyze new real estate markets:
- Commercial Tenants: Commercial property trends are a strong indicator of future residential performance. Are local shopping malls dying off? Do they have extended vacancies? Are new corporate head offices moving into the area? Or out? Which types of stores are coming in? Zillow claims a Starbucks coffee shop signals faster appreciation. Does a Walmart signal a growing area? Do dollar stores signal a struggling area? Are bank branches opening or closing? What types of gym brands are close by? Are they $26,000 per membership fitness centers like Equinox? Or budget brands like Anytime Fitness? Pay attention to what the local commercial industry is saying. You will be surprised what you can learn about an area just by analyzing local business demographics.
- Are Local Real Estate Websites Overloaded: There are lots of variables associated with subsequent realtor websites. However, if you are running into overloaded real estate websites in your searches, it could be a good sign of demand. It could signal a good time to launch your own website with more bandwidth. Use online tools to measure how much website traffic local real estate sites are receiving. Determine what keywords are hot. Which sites are the most popular, or not. Find out whether companies are getting organic traffic or they are paying for it.
- Ask Google: Google Trends can provide insight into real estate trends. What is trending in San Diego may be different than Charleston. This free tool will help investors determine if demand for property in any area is rising or falling. It will show if demand is seasonal or not. It can reveal what specific neighborhoods are hot, or not. Google even shows which types of properties are most searched for. This can be invaluable.
- Days on Market (DOM): This is a good indicator of a market’s strength. It reveals how fast homes are selling, or not. Various Realtor associations publish this data. Local property appraisers have this information. Investors with access to the MLS can look up relevant information for themselves. To get the whole picture, real estate investors need to investigate other types of listings too. Homes can be selling far faster offline. They can be selling before Realtors have a chance to put them in the MLS. Or MLS data may be masking how long many homes are rotting on the market. How about talking to local FSBO’s? Check HUD home auctions to see how many rounds of bidding they last. Follow up on Craigslist and newspaper classifieds to see if properties are still available or sold.
- Mystery Shop: Whether fixing and flipping houses, wholesaling, seeking rentals, or setting up shop as a Realtor, it pays to shop. Call around. Email. Direct message. Visit real estate offices and open houses. Feel them out. Are they busy and confident? Or are they desperate and idle? What are they doing well? What are they doing poor at? Where are the opportunities?
- Virtual Assistants: The serious investor interested in thorough due diligence has lots of research to do. There can be masses of data to sift through to do a good job. This isn’t the best use of time for most investors. Research firms charge large sums for their information. Virtual assistants can do the same tasks for a fraction of the cost. Have them do it all and submit professional reports. Or have them shortlist websites, resources, and statistics for you to investigate further.
This list isn’t exclusive. There are other options to consider. Local real estate investment firms may share their data if you are shopping for properties with them.