How to Find the Perfect Location to Invest In
Not every market is going to be a flip market, so how do you know if the market is going to be good for flipping or not? Since every market goes through a cycle independent of any other market, they won’t all be on the same wave at the same time. Some will be good for flipping, while others will be good for cash flow.
So how do you know where you should go if you want to flip? Calling and getting information from a realtor is always going to be useful, but there’s a great way to narrow down your list of potential cities before you start making these phone calls. The easiest way to get accurate market information is by visiting Best Places.
Best Places provides census information from every single town and city and can be used to help determine what might be a good flipping market. It’s a straightforward website with easy to read information and can give you a good idea about what’s happening in a certain area. Here are a few things you want to look for when looking for a city to begin investing:
- A positive population change
When you first visit the website, type in the name of a city. The first page that comes up is the overview. This will show you the population change. And hopefully it’s a positive one. This number indicates either the growth or decline in population since the last census. If the number is positive, that means that people are moving to the area, which is a good sign for flippers.
- More homes owned vs. rented
Under the housing tab on this website you will see a line that gives you a percentage of homes owned in the area and another line that gives you the percentage of homes rented in the area. For flippers, we like to see more homes being owned since our overall goal at the end of the flip is to sell to a home buyer, not a home renter.
- That people can afford the housing in the area
There are two places on this website that can help us determine whether or not housing is affordable in a certain area. Click on the “Housing Stats” tab. This page will show you the Housing Overview. Take note of the median home cost.. Then under the “Economy” tab, take note of the household income. This is the average amount people in the area are taking home on a yearly basis. The rule of thumb is that people can afford housing three times their income. If you multiply the household income by 3 and the result is at least as much as the median home price then people can afford housing in that area!
If all of the information you find on the city of your choice is positive for investing, move on to the next step and call a Realtor in your area! Looking at sold comps days on market will be your final indicator on how properties are moving in the area. What areas are you interested in investing in? If you’ve already started flipping in an area, why and how did you choose that location? Leave us a comment below!