Too many of the investors we talk with start by choosing a market. Unfortunately, this market is typically the market they live in. Sure on the surface this makes sense, investing in the market you live in gives you a sense of control however, for many of you that may not hold true. First, Real Estate Investing should be about the financial statement, not the property. Many people who invest in their “Back Yard” justify poor returns because they know the area.
Lets take a look at two different markets across the country; Tulsa, Oklahoma and where I live, Denver, CO
| Tulsa | Denver | |
| Population | 382,000 | 567,000 |
| Median Home Price | $83,600 | $165,800 |
| Section 8 Rent 3 bed | $849 | $1,291 |
| Inventory under $100K | 651 | 182 |
While I live in Denver, I would much rather invest in Tusla for the following reasons.
- Inventory, with 651 properties under $100k I can be more selective on the neihborhood and condition of the property.
- Median House Price, With a median under $100K I can find more properties that cash flow well.
- Rents, The ratio between the rent and property prices is significantly better in Tulsa.
- In Tulsa there are 44 properties under $20k…I can do alot of fix and flips with those prices.
- According to the Office of Federal Housing and Economic Oversight, Tulsa has continued to appreciate over the last year.
So when you are looking at investing in Real Estate and you are looking at the numbers, make sure the markets you invest in make financial sense.
