The Science of Flipping - Why I'm Going Into Other Real Estate Markets

Episode Date: January 20, 2021

Why I'm Going Into Other Real Estate Markets

What is up? What is up, everybody? Welcome back to the Science of Flipping. I am your host, Justin Colby. And if this is your first time, this is all about real estate investing, all the tools, the systems, the strategies, over on YouTube, make sure to jump to YouTube, youtube.com forward slash Justin Colby. I drop a video there a day, just like I drop a podcast episode here a day. Now, I have had several students ask me about why I am going into different markets, why I'm opening different markets, how am I choosing them, what's my criteria. So let's jump into that as there are more and more people and especially many of my students are looking to go virtual as well. And so let's talk about the criteria I use. I definitely think it's probably going to be different than what some people might say, but this is how I'm opening up different markets and why I'm running so fast and getting so many deals. So first and foremost, I want to make sure it is a market below the median price point, right? So right now, I think roughly as I shoot this podcast,

we're roughly like low 300s. I think it's like 315,000 or 325,000 is the national median price point for homes being sold. So I want to choose a market under that. Okay. Now that's a lot of markets in America. And so then how do I break it down from there? Well, I then look at what major universities and major sports teams are in the market. I tend to look at that next. I know that might be a little different than some, and maybe not, but that's the things that I look for because I do believe the economy will continue to run as long as there's major universities and major sports teams.

I feel like the economy is going to be a good economy because it brings in tourism, it brings in events. Listen, during this whole COVID thing, and obviously schools going in and out of schooling, this may change over the years, who knows what's going to happen with schooling universities, you know, and all of that, does it go all online? I don't know. And does sporting events go all online? I think eventually this whole thing washes away eventually when, when all the, whatchamacallits, vaccines all in line. And, you know, a year from now, I think the world will be a totally different place when it comes to COVID.

So I do believe my point two of looking at universities as well as sports teams, they won't be affected long-term, maybe a little bit right now, but I still use it as point two. So if you think about why I went to Oklahoma city, you have major colleges and you also have major sports teams, right? Great market, well below the median price point and the surrounding areas are nice. Right. And so in Oklahoma city, I then will say, what are your tertiary cities to that? And honestly, Oklahoma City, what's so nice about that is, you know, Tulsa is only two hours away, and there's great tertiary cities in between both. And then you have a city like Lawton, which has a massive military base. And so when I was looking at Oklahoma City, I was looking at all three of those aspects as,

you know, areas where people really want to be. Now, Tulsa has a major university as well. I don't believe there is a major sports team out of Tulsa, Oklahoma. So, you know, maybe they have some AAA teams I would want to look into. But because it's so close, could I very easily kind of just combine the marketing? I mean, two hours away in Oklahoma, you know, you might be able to leverage certain buyers who want to buy rentals or flips because it's not that far away, meaning they could even have their crews essentially go do it like very similar to Phoenix. Tucson is roughly only an hour and 45 minutes away. So is there an argument? And this is why

we're doing deals in Tucson as well. Is there an argument to be made where buyers can kind of jump from one into another because it's close enough that they have, whether it's cruise relationships, et cetera. And so, you know, we're doing deals in Tucson for the exact same reason. part three of why I choose cities is really kind of the growth versus employment, right? Then I dive in a little bit more about what type of growth and employment really is going to happen in that area. And if I can go in and do a quick look of, you know, growth and unemployment ratio, et cetera. I'm not overly heavy on point number three, because I do believe, you know, is more about growth. And what I really like right now, why I'm so bullish on tertiary cities is people are leaving the downtowns, right? So other markets that I'm going to be jumping into this quarter alone. Markets like Milwaukee, markets like Charlotte, markets like Wilmington, North Carolina, Charlotte, North Carolina, Milwaukee, Wisconsin,

Kansas City, you know, several markets in Indiana. Those are markets I'm looking at. I'm not going to go into every single one of them because I think people are realizing they can work from anywhere and, you know, people are leaving the downtown work from anywhere and, uh, you know, people are leaving the downtown. So I want to be in a good price point where there's good rents, good income and good growth available. Right. And so those are the top three things that I look at and I'll review them again.

First of all, it needs to be under the median price point. Second of all, I want to make sure there's a major university and a major sports team there. And thirdly, I want to look at unemployment and growth opportunities there. If I can dial those three in, I'm all in, right? Now, if there's two out of three, so for example, it doesn't look like there's a lot of growth, but maybe there's other things coming, like maybe some sort of industry is coming to that market, right? Maybe a car manufacturer is going to open up a big plant. Maybe there's a tech industry coming to that market, right?

I will take a look at those type of things. I look all over, you know, from Yahoo to CNBC to Wall Street Journal to, you know, Forbes, you name it, just kind of looking at different articles regarding that city, regarding business in that city to try to get a pulse. But the reality is the top three are the top three for a reason. And typically, if I can get one and two locked down, I'm pretty much a go, right? Because I don't believe I'm ever really, really, really going to get hurt by taking big risks in markets that are under the median price point. And when I say under, I mean, I'm substantially under like if the median price point is 325, I'm not talking about like 300 or, you know, the median price point in that market

is 275. I'm saying like the median price point needs to be, you know, roughly 30 or 40% of the medium. Okay. So if the median's 325 and i'll even do my math right now for you guys what's the medium 325 times let's just say 70 i need that you know median price point of that market to be roughly 225 right that's the type of price point that i'm looking for okay now i know there's going to be people that hear this and say, oh, Justin, what about this? And what about that? For me, I want to make sure I have a stable economy, right?

I don't want people, you know, not wanting to move there. I want to make sure that there's sports. I want to make sure there's universities. To me, those are really pillars. Those are like, you know, epic pillars that like will continue that city flourishing uh look at phoenix for example right you have hockey you have uh asu you have um obviously the cardinals and the diamondbacks as well as the phoenix suns i mean it's just you have all of these pillars that create such a great economy here. And this is why everyone's moving here, frankly. And so again, if I get those two first ones, then I start to look at growth,

I look at unemployment. And that's kind of just the cherry on top. If I see those things, I'm all in, I'm moving forward. So hopefully this helps you guys make a decision. Don't overthink this. In my opinion, done is better than perfect. You're going to find out very quickly. Right. Another kind of one off thing that I'll mention real quick before we end up or wrap up is start looking in these Facebook groups for people, you know, search the city in those Facebook groups. Is there any movement in all of these national Facebook groups? If you're not a part of the Science of Flipping Academy Facebook group, go join it. There's thousands of investors in there, you know, go join the Science of Flipping Academy Facebook group. It's a closed group, so join it. There's thousands of investors in there, you know, go join the

science flipping Academy, Facebook group. It's a closed group. So you have to search for it asked to be requested or asked to join. Um, and then search that city, search those things, see what kind of actions going on, right? There's a ton of groups out there. Go check those out, go search, you know, the city, just go into Facebook and then go into, you know, real estate investors and then the city and then see what kind of groups are there. And I think that'll give you a good understanding if there's action out there, if people are there, if it's a market to be in. So those are my couple points there. I hope that finds you well, and I will see you on the next episode. By the way, make sure to go check out

the last couple YouTube videos I dropped. Heavy on how to negotiate, how to find sellers, what to do, what's the best marketing. Go to YouTube right now. Subscribe to my channel. I got some fire over there every single day. Go to youtube.com forward slash Justin Colby. Talk soon.

Peace.