Should you invest locally or nationally?

By
Home Builder with 1st Priority Roofing LLC RPI0036302

This is a tough question and the answer depends on a few key factors such as:

  1. What your real estate investment objectives are
  2. How your real estate plan maps your investment objectives
  3. What market conditions are currently like in your area
  4. What information sources you have to help guide your decisions

One of the first things to consider in developing your real estate plan is whether you are oriented towards an income or growth strategy.  In real estate terms this is simply appreciation or cash flow. 

All too often, real estate investors balance their portfolio too early toward an income strategy, thereby missing the leveraged growth potential of rising real estate values.  This is typically the case simply because investors often times limit their investment portfolio to owning property exclusively in their own local market.  While this can be a positive in some respects, it often times leads to missed opportunity.

On the other hand, it is many times the case where an investor waits too long to transition from a growth strategy toward an income portfolio and therefore feels greater impacts of changing market conditions.  In either case, it is simply staying in tune with and monitoring current market conditions that will help you plan when to buy, how long to hold and when to sell.

Your real estate plan should map out a balance between growth and income based on your current investment capital resources, your investment timelines, current market conditions and your acceptance of potential risks and rewards.

Once you clearly define your investment object and map out your real estate plan; you must carefully consider the current market conditions in your local area.  Is your market good for an appreciation strategy, does it offer maximum cash flow potential?  Is it over or undervalued?  How sustainable is your market for either short or long term investment plan? 

These are critical questions that you have to answer before you can truly determine whether your real estate portfolio is performing at its peak potential. 

Real data regarding real estate market conditions can be difficult to find, often times expensive and most of the time out of date.  This leaves the real estate investor making decisions and always trying to determine if their gut feel is right.  That is, until now. 

InvestorLINX is an online real estate market research site designed to help real estate investors maximize the potential of their real estate portfolio.  With real time, up-to-date market condition data covering the entire country, real estate investors can easily determine whether their local market conditions are conducive for their investment strategy and how their local area stacks up to the rest of the country. 

If you find that your personal investment strategy should be geared toward cash flow, but your current local market conditions are heavily favoring an appreciation play - you may need to look outside of your local area.  Using the quick sort research features online, you can quickly and easily find the top cash flow locations to meet your needs.  Then, connect directly with a local professional real estate agent in that market that specialized in investment property transactions.

Below is just a snapshot view of the market condition ranking system and up-to-date affordability and population figures.  An overview of each market condition ranking systems is available by continuing to scroll down. 

In addition to the ranking system, weekly market performance data, up-to-date migration, vacancy and absorption mapping at the zip code level, executive market summaries and comprehensive local economic reports are all available online.  You can take a video tour of all of this by visiting the website and see how it all relates to both the local investor and the national investor. 

Austin, TX

 

 

Median Asking Price

 

Wage Adjusted Median Price

 

Estimated Metropolitan Area Population

 

Primary City Population

 

$245,000

$304,663

1,582,282

656,562

 

 

InvestorLINX Ranking System

 

Vacancy Rank

 

Migration Rank

 

Supply & Demand Rank

 

Cash Flow Rank

 

17

13

2

32

 

Here's what it all means.  The median asking price (current this week, May 2007) in Austin is well below the Wage Adjusted Median suggesting that the area remains relatively undervalued.  The population figures are up-to-date estimates as of April 30, 2007 and are adjusted monthly.  Two ranking systems, the Migration and Supply & Demand rank are indicative of appreciation potential and activity, whereas the Vacancy and Cash Flow rank are indicative of income potential.  For each rank, a value of 1 is the best, ranked out of over 100 metro areas from across the country,

Performance Rank by Area

Features Overview

What it means for you

Weekly ranking system that ranks all active cities from the greatest supply and demand imbalance to the least supply and demand imbalance (i.e. the greatest loss of inventory with the greatest upward pressure on local housing prices)

The higher the performance ranking, the greater the imbalance between supply and demand exists with demand outpacing supply. The lower the rank, the more balanced the supply and demand has become to the point that supply actually exceeds demand creating a softer local market. 


 Cash Flow Rank by Area

Features Overview

What it means for you

Weekly ranking system that ranks all active cities from the highest to the lowest potential cash flow potential based on current housing values and approximate lease rates.

The higher the cash flow rank, the more likely local rents are to cover or exceed local debt service and expenses. While not a direct indicator of commercial cash flow, commercial investments flourish many times as residential cash flow ranks begin to fall as a result of rising property values due to in-migration.


Vacancy Rank by Area

Features Overview

What it means for you

Weekly ranking system comparing all active cites against each other from highest to lowest vacancy rates.

The higher the ranking, the lower the household vacancy rate. Typically indicative of shorter lease periods and rising lease rates. Searching for higher ranking vacancy areas typically leads to less cash flow fluctuation.


Household Migration Rank by Area

Features Overview

What it means for you

Weekly ranking system that compares all active cities again each other from highest to lowest in-migration.

The higher the ranking, the more people by percent change are moving into an area. When in-migration exceeds the local building pace, inventories become tight forcing property values to rise. Searching for high ranking in-migration along with dropping inventories many times leads to rising values.

Please visit our web site at InvestorLINX and call me.
I will be happy to walk you thru the site explaining in more detail how InvestorLINX can help you find the best markets anywhere in the country.

 

Dan Matheny
877-428-3030

Comments (3)

Paul Anyanwu
RE/MAX SOLUTIONS - West Orange, NJ
CRS, SFR, Broker-Salesperson, Sales West Orange,NJ
you did a lot of work thanks for sharing this hard work, investments locally or internationally depends on many factors like you pointed out it aslo, up to you on where you feel comfortable and the kind of return you expect .
May 11, 2007 12:09 PM
Dan Matheny
1st Priority Roofing LLC - Denver, CO

Paul

I agree investor confidence is very important. Thats why we have the research and analsys tolls available along with local host teams to assist the investor with the specific property selection, purchase, closing and ongoing property management.

 

Let me know if you want me to walk you thru a test drive of our site, or visit my home page here on Active Rain

InvestorLINX

May 14, 2007 03:40 AM
Anonymous
Renee Kaplan
This is Renee Kaplan at www.reneekaplan.com. National City and Global insight reports that Tulsa housing is the 10th most undervalued area in the nation for the first quarter of the year.
Jul 03, 2007 05:28 AM
#3