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How To Perform Due Diligence On A Market PowerPoint PPT Presentation


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Make no assumptions when it comes to where to invest. Sophisticated real estate investors conduct thorough market research before investing. They know that all real estate is local, and winning property investments are all about “location, location, location.” So what factors do savvy investors look at? What indicates a good market to invest?

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How To Perform Due Diligence On A Market

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How to perform due diligence on a market 7435469

HOW TO PERFORM DUE

DILIGENCE ON A

MARKET

What should mobile home park investors be

looking at when evaluating markets to invest in?


How to perform due diligence on a market 7435469

Make no assumptions when it comes to whereto

invest. Sophisticated real estate investors

conduct thorough market research before

investing. They know that all real estate is local,

and winning property investments are all about

“location, location, location.” So what factors do

savvy investors look at? What indicates a good

market to invest?


How to perform due diligence on a market 7435469

#1. LANDLORD FRIENDLY STATES

#1. LANDLORD FRIENDLY STATES

 Intelligent buy and hold real estate investors will

normally filter out and focus on states based on their bias

for ruling in favor of landlords versus tenants. Even if you

plan to resell your acquisitions relatively soon this will be

a factor for the next buyer too. Some states like Florida

are friendlier to landlords. Others such as Massachusetts

are decidedly in favor of tenants. If you don’t want tenant

issues, look for states with legal systems in your favor.


How to perform due diligence on a market 7435469

   #2. TOP RANKING MSAS

#2. TOP RANKING MSAS

Once states have been shortlisted investors often boil their

search parameters down further by MSAs. Larger

Metropolitan Statistical Areas are seen as being more

sustainable and profitable. Larger population concentrations

generally foster more transaction activity, and in turn price

appreciation. They may also be more stable over the long

run compared to a small rural town which could more easily

go bust and become a ghost town in a very short period of

time. More people also suggests more demand for rental

units, lower vacancy rates, and the potential for faster rental

rate increases.


How to perform due diligence on a market 7435469

#3. TREND SETTING STORES

#3. TREND SETTING STORES

Certain stores are known for leading growth in new areas.

It could be that their research enables them to move into

areas which are about to explode. Others argue that

certain brands drive real estate and population growth.

Both may be true. Some examples of this include

Walmart, Home Depot, and McDonalds. Recent data even

shows that real estate located nearer a Starbucks is

worth more than other properties.


How to perform due diligence on a market 7435469

#4. INCREASING POPULATION

#4. INCREASING POPULATION

Population growth is incredibly important to real estate

investors. There may be some well-established

communities in the US which are actually beginning to

age and die off. Others have proven growth decade after

decade. Population growth is directly linked to demand

for rentals, and rental rates. Wikipedia offers a quick

resource for tracking the population of a given city.


How to perform due diligence on a market 7435469

#5. INCREASING EMPLOYMENT

#5. INCREASING EMPLOYMENT

Strong employment not only dictates the ability to rent

and for how much, but also how tenants will perform.

Clearly mobile home parks are unique in that they can

benefit and thrive in tough times, but if people don’t have

money to pay, or end up leaving town for jobs that can be

a challenge. Remember that “a rising tide lifts all boats.”

The United States Department of Labor, Bureau of Labor

of Labor Statistics reports on local unemployment rates

 and rankings.


How to perform due diligence on a market 7435469

#6. DIVERSITY OF EMPLOYMENT

#6. DIVERSITY OF EMPLOYMENT

Diversification and type of employment and industry is critical

to the sustainability, consistency, and growth of real estate

fundamentals too. Without a good balance of

industries, entire metro areas can go broke. Look at Detroit to

see how bad it can get. The end of the auto industry literally

bankrupted it, and has left much of the region as ruins and

urban war zones. Despite its prominence, Silicon Valley is

incredibly reliant on tech. A bursting of a tech bubble could

certainly have a significant toll. Again it is important not to

make assumptions here


How to perform due diligence on a market 7435469

#7. TYPE OF EMPLOYMENT

#7. TYPE OF EMPLOYMENT

How about the balance of outsourced work versus work

that cannot be outsourced? Brick and mortar industries

which are hard to move may be a good sign. Is this

market supported by organizations that can’t afford to

move, or can’t do their work elsewhere? Is the talent pool

so strong that other businesses will come to feed on it?


How to perform due diligence on a market 7435469

#8. OCCUPANCY RATES

#8. OCCUPANCY RATES

How strong are local occupancy rates?

Higher rental occupancy rates secure

consistency in income, increase property

values, and provide to rising rents and

better tenants and terms.


How to perform due diligence on a market 7435469

#9. AFFORDABILITY

#9. AFFORDABILITY

When surveyed analysts replied that they

believed the single most important factor for

real estate was affordability. How affordable are

properties? Are wages strong? Is the destination

affordable enough to keep attracting smart

money and serious employers?


How to perform due diligence on a market 7435469

#10. TRENDS

#10. TRENDS

What other trends are in play? What trends could affect a

potential acquisition during the time you plan to hold it?

Is the destination becoming more or less fashionable?

Who is buying and holding property here? How will that

matter if the economy goes south, a foreign economy

goes under, or currency exchange rates change? What

about property taxes? Are they headed up or down?


How to perform due diligence on a market 7435469

TO SUM IT UP:

There are a number of fundamentals that savvy investors

look at when selecting a market to invest in. Never make

assumptions if you want reliable investment returns.

Fortunately the internet can make it incredibly fast and

easy to dig up the data.


How to perform due diligence on a market 7435469

For more information and

inquiries:

MOBILEHOMEINVESTORS.COM


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