Are you planning to expand in a new real estate market or neighborhood? Since the real estate market is depending on several factors such as economic conditions, interest rates and trends, it’s hard to tell when the best time to expand is. On the other hand, with the right strategies and approaches, it would just be easier for you to try other markets that can boost your chance.
Today, I am going to discuss the four practical steps for expanding into a new real estate market.
Currently, I am multiple sub-markets within Indiana, particularly in Indianapolis with larger MSA and other markets such as Louisville. Expanding into another market or setting will allow you to get more deals instead of just focusing on one area. I am not perfect, I’m still adjusting this process, but through this, it has helped me improve myself.
1. Determining Your Investment Philosophy
First off, you need to determine your investment philosophy. Meaning, are you more buy & hold or are you more of a gambler from my perspective of taking appreciation play which means that you are buying the property with minimal cash flow coming in and hope that you can flip it in 1 to 2 years.
This is important because it will help you focus on the goals you want to achieve in the long run. Each market offers something different, so it is ideal if you can determine or reflect on them first as this can help you.
2. Assemble a Team
By assembling a team means you getting the roles on-board such as a realtor, property management, boots on the ground etc. A realtor could be very important especially if you want to make offers on properties that are listed and they can also send you pocket listings or off-market deals where you will be able to have the first look and get an offer before anyone sees it.
What tends to happen in today’s climate, once a property hits the market whether it is an apartment it gets bidded up and you see brokers listing the properties at an undisclosed price to build more demand along with a highest and best bidding war.
I would highly recommend to everyone whatever market that you are investing in is at least go visit it if not local. That’s one thing I see quite often investors are getting into trouble is they buy properties in neighborhoods that they should not be investing in because they have not actually seen the property. You want to trust and verify with boots on the ground.
You want to have a lender on-board as well another vital portion if you are not buying these properties with cash. You would be submitting offers on properties, and then once you utilize your property management company to do the walk-through, perform the inspections.
3. Perform the Due Diligence
On the market itself, you want to have a better understanding on the economics. By economics, is there a population growth? Is it increasing or declining? You can simply use Google to help you get the information you need to help you decide if that particular market is good or not good option to expand. Economic, population growth, job growth, employment rate, crime rate, schools and occupancy rate are some of the information that you need to know in a certain neighborhood you are considering to expand.
4. Dive IN
Once you have all the key elements such as investment strategies, assembled a team did due diligence, it is now time to dive in. Getting the right information from the right people, books, and online materials gives you the edge to help you easily decide to dive in. What I did before I dive into multifamily investments from single-family is I gave myself a month deadline to learn and study the market.
Finally, I’m sharing this information because I don’t want you to experience the same mistakes and pitfalls I had encountered before, especially if you are planning to expand into a new real estate market. Hopefully, I was able to share with you the effective steps on how to find the right market wherein you can set your foot in.
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