Let’s face it. Whether it’s a car, lover or hot real estate markets, we all want a hot one.
You’re on your own for the first two, but in this episode we’ll do our best to help you with number three. That is, how to find hot real estate markets.
In the studio for this arousing discussion:
- Your smokin’ hot host, Robert Helms
- His faithful wing-man, co-host Russell Gray
- Regular contributor and Big Man on campus, John Turley
“Hot” things are usually the result of high demand and too little supply. Sometimes the desire to possess is there, but the capacity to pay is not. In any case, when more people want something than there is of it to go around, that thing becomes “hot”.
In investing, the goal is to be among the first to identify something that’s heating up, then grab it before the mass of other market players have gotten to the party.
So how do you get into hot real estate markets BEFORE they get hot?
Before we go there, consider that real estate as an investment is very slow moving. That is, even once the word starts to get out, it takes a while for market demand to reach its peak. This is good because it allows regular folks (not just all the pretty people in Wall Street) to get in on the action.
Also, because real estate isn’t really a main stream investment, the “Flash Boys” aren’t coming to the party at all.
In fact, real estate is more like a block party. It’s local only interesting to people who are in the neighborhood. So parties for hot real estate markets don’t tend to get too crowded very fast. This is also good for those of us who don’t mind driving (or flying) from place to place in pursuit of a fun party where we can get some action with a hot market.
So it’s important to go where your chances are good. We say it all the time, “Live where you want to live and invest where the numbers make sense.”
Step one is to watch for signals that a market is getting hot. And those signals don’t always come in a neat package or in ways that are readily recognized. Sometimes you have to be good a reading the smoke signals to recognize that a market is heating up.
In this episode, we invite John Turley to bring us up to date on his market, Ambergris Caye, Belize. It’s an interesting case study, especially if you’re not familiar with this market, because it illustrates how market drivers vary from market to market.
A fundamental concept of market analysis is supply and demand. If there are lots of people demanding a particular area, product type or price point, that area, product type or price point has the potential to get “hot”.
But how do you know WHICH area, product type or price point? And how can you see it BEFORE the majority of others see it?
This is where purposed proximity is essential.
Purposed proximity is getting close to a market with a conscious decision of looking for critical clues about supply and demand trends.
Many people live in areas with opportunity all around them. They have proximity. But they aren’t purposeful. So they drive by opportunity every day and can’t see it.
Others are purposeful from a distance. They look at charts, graphs, stats, news and data. They can sense opportunity because they’re purposeful. But they can’t actually see it because they lack proximity.
Here’s where it’s important to realize that hot real estate markets are like people. You have to be close enough to pick up their unspoken clues that signal opportunity.
Body language experts tell us that communication is only 7% verbal.
This means that words only account for a fraction of the meaning in a conversation.
The majority of communication is in tonality, facial expression, gestures, eye contact, etc.
To really get the “vibe” of another person, you need to be in close proximity. Or at least be able to see and hear them, which is why video chat has become a popular communication tool for people in both their personal and professional lives.
For a real estate market, price and sales data is analogous to the words in human communication. It tells SOME of the story, but it’s a far cry from telling the WHOLE story. This is why we’re big fans of field trips. We like to visit markets up close and personal. We like to feel them to know if they are actually hot real estate markets or not.
Plus, when you visit a market, you build relationships with people who can become your boots on the ground.
For example, even though we go to Belize a lot, it’s nice having Big John and his team with boots on the ground. They have their thumb on the pulse of the market. And not just data, but rumors, inside information, and real time activity. It’s that way for every market we’re involved with.
With that said, some data is very useful because it’s a leading indicator of demand.
For example, if a large employer signs a deal to open a new operation in a small town, the resulting employment can be a driver of demand for housing. But because the demand hasn’t manifested yet, there’s time to get in ahead of the wave.
And before it’s in the paper for the whole world to know, there’s usually a handful of local market players who know it’s coming, like the commercial real estate broker helping to find space or land for the business. Or the residential brokers looking for housing for the key executives. Boots on ground.
Of course, just because a big employer is moving in, it may not be enough information to take action on. But when you have several corroborating signs from different sources, then you probably have something substantial to act on. In any case, it CERTAINLY warrants a closer look…because where’s there’s smoke, there’s usually fire.
So listen in to this discussion as Big John Turley provides some of the many signs which say “market on fire” in Ambergris Caye. Then think about whatever hot real estate markets you’re active or interested in. What smoke signals are in the air and how can you investigate further?
And then remember, you don’t want to by shy when the market’s sending out the “vibe”…or you risk missing out on some hot action.
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