picking a market to invest in is one of the most important things that you have to decide as a real estate investor and this is because the market you choose actually plays a very large role in the performance of your individual Investments and given how important this is today I'm going to show you how to do market research for any Market in the United States and to help with this I'm trying something new I actually made a picking a market worksheet that you can use for free and follow along with this video you also can just watch watch the video and download this later and do it on your own time but you should check out the worksheet you can get it for free at biggerpockets.com srour or we'll just put a link in the description below so definitely check that out and download it and if you want to you can pause the video right now go get it and then follow along as I explain how to fill out the worksheet or if you want you can watch the video right now and get the worksheet later and do that on your own time again it's completely free so you might as well use this if you want to learn how to pick a market the sponsor of today's video is a longtime Bigger Pockets contributor and America's top TurnKey company REI Nation with over 8,000 properties managed 3,200 investors served and more than $2 billion dollar in rental assets under management REI Nation stands as a leader in the stressfree turnkey space operating in 13 different markets they offer high value properties with consistent returns and customer focused Property Management that outperforms the competition whether you're a seasoned investor or new to passive asset Investments Aran is there to help you meet your financial goals mitigating risk protecting capital and delivering exceptional customer service they've done it year after year effortlessly so are you ready to Kickstart your TurnKey investing Journey just click on the link in the description below and from there you'll be connected with one of their experienced portfolio advisers whose whole job it is is to ensure your success if you're wondering who I am and why I have any sort of business talking about picking a market first and foremost I've been a real estate investor for 14 years and I also work full-time at Bigger Pockets as the vice president of Market intelligence which basically means that I do this looking at individual markets studying the housing market studying economics I do this all day every single day one of the things I think is important to know that I've discovered in my job as the VP of Market intelligence is that there is no such thing as a quote unquote best Market there are tons of good markets across the United States it's really about what the best Market is for you and most markets work with at least one real estate investing strategy so some markets are good for cash flow where others are good for flipping some are good for short-term rentals and so on so the first thing you need to do when thinking about which Market to invest in is number one set your own priorities that's really important because if you don't know whether you're looking for appreciation or cash flow or a combination of the two it's going to be really hard to pick a market the second thing you're going to going to want to do is set a short list which is basically come up with five to 10 different markets that you're going to do a deep dive into there's plenty of ways to do this you might want to pick areas around your where you live or you can look at some lists that I publish or other media Outlets publish that talk about best cash flow markets best appreciation markets and you can start there the third step to picking a market is the one we're going to be talking about today which is market research and that's when you take that short list and then go into each market look at a lot of the data understand what's going on on the ground in these individual markets and decide which one from your short list is the right one to invest in again today that's what we're going to focus on and I'm going to pull up on my screen the worksheet that I created all right so this is the market picking a market worksheet that I created and the first thing that you're going to do is just put the market name down because if you build out your short list you might have five or 10 of these markets and so I'm actually going to do Huntsville Alabama today I've heard a lot of good things about Huntsville never been there never really analyzed it deeply so I thought that might be fun and so basically what you're going to do is go through each of these uh prompts on the worksheet and just fill them out and so I've done this research a bit ahead of time so you don't have to see me Googling around but I will tell you where I found all the data for each of these individual things in market research and on this worksheet I usually break it down into two different things so the first is what I call Market fundamentals this is more macro economics sort of broad big picture stuff about what's going on in individual markets and then later we'll get to this in just a minute we'll talk about housing market conditions so that's like what rent is how much prices are in the actual housing market and when you combine those two things then you've done good market research but let's start at the top so population growth is something that I think is super important and because it's really impacts supply and demand in a market more people that are going to an individual area area that obviously means that's going to increase demand and so when I look at population growth I see that it's 2.1% for Huntsville and a pro tip for getting this data is to use the Fred website it's completely free the Federal Reserve Bank of St Louis they basically aggregate Census Data all sorts of other data and they make it really free and easy for you and if you want a pro move here don't just pull up the Huntsville Alabama population growth you can also add a second line to the chart and do the national average and so you can see in this example that population growth in Huntsville is 2% while the national average is about 1% so it's a lot better I'm going to do the same process using the Fred website for a lot of these things but I'm just going to fill them in quickly so you guys don't have to sit here while I do this but I looked up household income which is about $61,000 in Huntsville then we're going to talk about wage and income growth which was5 5% last year in Huntsville which is great because inflation was 35% so that means wages are growing faster than inflation increasing spending power in Huntsville that's a really good sign one of the strongest things I found about Huntsville is that it's its unemployment rate is 2.1% which is shockingly low it's extremely extremely low on a national average the unemployment rate is low at 3.5% but 2.1% it's about as low as it goes that's what most economists would call quotum quote full employment so that's a really good sign next we'll move to job growth and we saw that jobs employment grew 3.6% last year again really good our home ownership rate is 58% that's a little bit below the national average which if you're a rental property investor is a good sign because it means there's more renters more demand for rental units in that area and the median AG is 37 not super young but relatively young compared to the rest of the country so those are sort of the more objective stats that you want to fill out for any Market that you're looking at then you need to go to some of this more subjective stuff and you can't really use the Fred website for this I just recommend Googling around for these types of this type of information so for biggest employers I I just Googled this and you can you there are some websites that aggregate it but personally I actually like to use local websites like the local Chamber of Commerce the local government website a local newspaper or media Outlet I find that those actually have the best information so I pulled a lot of this from those types of things what I found out is that the US Army is the biggest employer in huntsfield s followed by just various medical facilities then NASA and then Boeing the airline uh the man the airplane manufacturer so you can put as many of these as you want here um I just look at the biggest ones and what I want to see is that they're well Diversified so if you look at um Huntsville it's not the most divers iify because it's a lot of like Aeronautics Boeing NASA US Army but these types of companies are very stable they are not very cyclical like when things go bad in the economy they still tend to do pretty well so I feel pretty good about that next I went on a a website like Niche ni.com and pulled some crime statistics and this stuff might not make a lot of sense but luckily they compare it to you for national average and so you can see that it's below well below the national average so it's a Rel L safe city which is great then I went and Googled public schools and honestly the public schools are not great in Huntsville but that there are a couple good uh suburbs that um are good and so depending on your individual strategy you may choose to invest in the suburbs if you're looking for more family type tenants okay then moving right along will go to the regulatory environment and this is something that's hard to quantify but basically different states different municipalities have different regulations about being a landlord and being a investor particularly around short-term rentals so you want to see like is it a relatively friendly place for business and landlords or short-term rentals and Huntsville is so I would say it's a positive climate for the regulatory environment but if you look at a place and there's a lot of Regulation doesn't necessarily mean you can't invest there but you want to write that down because that's an important data point for you to consider when you narrow down from your short list the last thing is what I would call X factors and this is like just random things that you uncover in your research that make you like or dislike this particular market so when I looked into Huntsville I didn't really find any of these because I'm not doing a super deep dive here I'm just showing you an example of how to do this but I think some good opportunities for you to find these X factors are again looking at local government website like is there a lot of infrastructure spending are businesses moving there um you know uh what is just going on in the general business climate those types of things can be X factors one way or another um and I recommend you look into a couple of them so that's it for our uh Market fundamentals hopefully you can see that this is very easy to do and you could be able to do this on yourself especially if you're using the worksheet and we're going to move on to housing market conditions all right so housing market conditions gets back into the more objective thing there's just stats that you can look up there's not really a lot of nuance to it and most of these stats can be found easily either on red that's usually where I go Zillow as decent data realor.com those types of websites you can find them relatively easy so I'm just going to show you what I found for Huntsville rather than just you know Bore You by going through the website but what I found was that the average the median home price is $315,000 in uh Huntsville and it grew not at all last year it was actually flat so it wasn't up it wasn't down that's not uncommon right now um but it's important to know that it was flat last year but over the course of the last five years it grew a whopping 46% so that's pretty incredible to see um a lot of growth over the last 5 years the next thing is housing inventory because this will tell us if we're in a strong uh buyers Market sellers market and what I found was that inventory was up 12% that is probably why housing was flat last year because the less inventory the more it's a buyer market prices tend to go up a little bit less and so that does not necessarily a bad thing it just helps you understand how you should bid if you do wind up offering on properties in that market next we have property tax rate which is super low in Huntsville it's 36% the national average is about 1% so it's about a third of the national average so that's really low and insurance which I looked up was about 1,500 bucks so hopefully you can see guys I just Googled this stuff or looked on Zillow or redin it took me like 5 minutes to get all this information so hopefully you can find it easily as well median rent was 1463 year over-year rent growth was 3% and 5-year rent growth also really strong at 50% now these last two things are things that you have to just calculate yourself it's not hard because you've already done the data but gotten the data so you want the rent to income ratio which is basically take your annual rent so you take this number 1463 multiply it by 12 to get the annual number and then you divide that by the median household income and what you get or what I got when I did that for Huntsville is 29% which is pretty good and I like 29% because budgeting experts say that tenants should spend about 30% of their income on rent and you can see it's right around that number that means that rent is relatively affordable in Huntsville for people which is good because that means they will probably pay on time and then might be opportunity for rent growth in the future the last one is the rent to price ratio all you need to do for that one is divide the monthly median rent one month of rent divide divided by the median sale price and when I do that I get 46% uh and that is pretty low so that means that it's Huntsville is going to have relatively low cash flow and that doesn't mean you can't find Cash Flow this means on average if you just take that median rent compared to the median home price you're not going to get great cash flow so that's just something to know but you want to go into these individual markets and start looking at deals to see if you can get cash flow this is just one barometer sort of rule of thumb way of looking at how well a certain Market might offer cash flow so that's it hopefully you can see how easy this is I went through it quickly because I just want to show you how to fill out the worksheet hopefully I think you the first time you do this everyone it might take you 15 or 20 minutes but after that you'll probably get this down to 5 or 10 minutes and you'll get using this worksheet you'll be able to compare them one another and see like okay of my short list like one of these five is way better than the other ones or I want to narrow down to these two and then go out and read an investor-friendly agent in these two markets so hopefully you can see that this Mar worksheet is really helpful and useful in doing that market research step all right so that's what I got that's the advice I have for picking a market hopefully this is helpful to you again if you want to be able to do this in the same way that I just demonstrated go to biggerpockets.com resources or just click a link in the description below and if you really want to become an expert in picking a market next week I'm going to be teaching a master class on how to pick a market it's kind of like what we did today but in much more detail I'm actually going to go step by step through sources where I find each individual data point I'll explain in a little bit more detail than I could today what each data point means and how you should use them in setting your own strategy thank you guys so much for watching for Bigger Pockets my name is Dave Meyer I appreciate yall being here and I'll see you next week [Music]