As a real estate investor, you want to find a market that connects with you and can make you a lot of money. In this episode of The WealthBuilders Podcast, Karen Conrad unpacks 9 steps to find the best real estate market for you. You will learn formulas to help you secure a profitable investment and strategies for how to determine if a market is a good pick for your unique goals.
9 Steps to Find the Best Real Estate Market for You
1. Find a property or area where you can get 1-1.5% of the purchase price in monthly rent.
This formula is for if you’re using the buy-and-hold strategy, which entails renting out your property for the long term.
2. Look for property prices that are within 3-4 times the median household income for the area.
If interest rates are below 4%, you can adjust the formula a bit. The goal is to ensure people can afford to rent your property.
3. Invest in properties that can give you a minimum cashflow of $300 per month.
Make sure you know what your property will rent for before you buy it (and that the rent more than covers PITIM)
4. Aim for a 10%-20% annual cash-on-cash return.
For example, if you put $30,000 down on a property, you want to make $3,000-$6,000 on your investment each year.
5. Determine a comfortable price point for you.
6. Find a market where you can work towards your Real Estate Professional Designation.
In other words, find a market where you can buy multiple properties and your taxes will thank you.
7. Look for markets with strong population and job growth.
8. Look for a market where you can make a positive difference.
9. Invest in an area where you can have a competitive edge.
Are there any opportunities for you to offer a creative solution to problems others in the real estate space aren’t solving?
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