Using Market Metrics to Spot Trends and Opportunities

Markets are always in motion.

Population, economic growth, demographics … these factors and more affect the supply and demand for every property you own.

Without understanding market metrics, investing is like reaching into a lake and hoping you pull out a fish.

But WITH market metrics … the savvy investor can spot trends and opportunities … and bag a winning catch!

Listen in as we explore how to make market metrics work for you.

In this episode of The Real Estate Guys™ show, hear from:

  • Your metric-master host, Robert Helms
  • His laugh-master co-host, Russell Gray

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Crystal balls aren’t real, but market metrics are

Every market is different.

Every city … every neighborhood … even every street has unique attributes of real estate.

When we look at real estate, we’re dealing with many different kinds of markets … niche markets, geographic markets, and demographic markets.

Real estate isn’t a typical asset class. Every deal is unique.

You can choose to throw a dart at the map and buy a property … or you can study market metrics and identify trends.

Most of the information readily available to investors isn’t local … it’s national or state data.

As an investor, you need to learn to take that higher-level data, look at both sides of the equation, and break down what it means for you.

We don’t have a magical crystal ball … but we do know that we can spot important trends if we pay attention to key metrics … and so can you!

Deciphering national statistics

Let’s start by talking about days a property stays on the market.

The National Association of Realtors recently announced that residential properties remained on the market for an average of 36 days in March 2019 … which was down from 44 days in February 2019.

What does this mean for the newbie real estate investor trying to figure out if this is a seller’s market or a buyer’s market?

This is the perfect example of national statistics that give a false impression when you focus on the market at a local level.

Someone in the Bay Area may think that 30 days on the market is forever … but to someone else from Kansas, that seems like selling in record speed!

Remember to dig deeper and look at both sides of the equation. Think about what other factors could be creating this metric.

Imagine that fewer people were listing their homes … that would mean that there were fewer houses available.

If there are fewer houses available but the same number of buyers … then the number of days spent on the market is going to go down.

On the other hand, if there are more sellers than buyers … then homes are going to spend more time on the market.

Three crucial metrics for real estate

Depending on the information you’re after, you pay need to attention to different metrics.

To get a good amount of information, you need a big statistical set.

That’s why most of the data that you read is going to be relating to a bigger group of properties than really affects your market and your property every day.

News pundits often talk about average home price and median home price. These are two different things with very different meanings.

If you have a list of 101 sales that happened last month, the sale in the middle of the list … number 51 … is the median price.

So, if you have the numbers two, five, and seven … the median is five.

And if you have the numbers two, five, and fourteen … the median is STILL five. Median price is NOT the same as the average price.

Another important metric to understand is net in migration.

People are always moving in and moving out of markets. Net in migration means a market where more people are entering than leaving.

More people means more demand for schools, services, shopping, and … housing!

It may seem like a rudimentary concept … but it is essential. If people are leaving a market, demand goes down and so do prices.

Dallas, Texas, is the perfect example of putting a market with net in migration to work for investors.

After the 2008 financial crisis, investors were forced to look at markets differently … and up until this time, Dallas had been boring.

The market had the least appreciation of markets on our radar … but after 2008, stability started to look really, really good.

Dallas had a winning combination of affordability, low income tax, vibrant infrastructure, and diverse economy.

The energy sector was a huge player … and it was one of the few industries that remained solid after 2008. As people moved in for jobs, demand grew.

Now, a decade later, we look at the net in migration, and Dallas has an additional one million residents since we first started looking into the market.

Look to the future

Some of these concepts may seem basic … but in real estate, it’s easy to fall asleep at the wheel. Real estate really does move slowly.

But when you see the headlines, you may feel like the wind is changing fast … and you need to act or be swept away.

Don’t panic. You have time to get in position, study a market, and build relationships.

Keep your focus on the basics … supply, demand, and capacity to pay. Every metric impacts these basic principles of real estate investing.

We can all look at the past and act on what we learn here in the present … but we need to look forward too.

As investors, we ultimately have to take our best educated guess. Market metrics give us the information we need to do our due diligence and act in the best way we know how.


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The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


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Podcast: Using Market Metrics to Spot Trends and Opportunities

Every property you own sits in a market that’s in motion.

MANY factors affect the all-important supply, demand, and capacity-to-pay dynamics which dictate the health and direction of your investment.

But like a skilled-mariner on a choppy sea, you can read the wind, waves, and stars to chart a safer and more prosperous course.

So listen in to this episode as we explore using market metrics to spot trends and opportunities.


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!

The Avengers Endgame and YOUR real estate investing …

You probably know The Avengers Endgame is the culmination of a 22-film decade-long extravaganza of EPIC story-telling.

What you may not know is how many great real estate investing lessons surround The Avengers Endgame.

Here are just a few … and don’t worry, there are no spoilers!

Lesson 1:  Businesses and their jobs will move to seek a better environment.

The Avengers Endgame was filmed at Pinewood Studios in Atlanta, Georgia … and NOT in Hollywood, California.

The Pinewood Studios website says Georgia is “the number one filming location in the world” according to this industry report by Film LA.

One of the reasons is ” … the highly competitive nature of tax credits …”

Over five years ago, the Los Angeles Daily News reported this trend …

Why TV, Film Production is Running Away from Hollywood

“ … they’re running away from here … primarily due to tax incentives offered in … states with rich tax credits such as Georgia …”

But it’s not just taxes, though they’re a BIG part.

As New York discovered when Amazon abruptly backed out of plans to bring 25,000 jobs to Long Island city for their much sought after HQ2 …

… it came down to a long-term environment that Amazon did not care to work in …”

And they’re not talking weather.  It’s the political environment.

So while YOU may or may not agree with Amazon’s or Disney’s politics or business practices … it’s important to remember how the businesses feel.

Learn to look at markets the way employers do … even if you disagree.

Lesson 2:  Get rich in a niche.

This is where LOCAL knowledge really helps.

As you might guess, creating a blockbuster film like The Avengers Endgame requires hundreds … perhaps thousands … of talented, highly-paid people.

While some workers are local to the studio, many come to town temporarily during production … which can last months.

These folks aren’t going to live in a hotel room or a trailer all that time, which means they need nice, local housing.  But they aren’t buying.  They’re renting.

Some investors we know figured this out … and developed an entire business model catering to the unique temporary housing needs of the film producers.

“What?  You didn’t see that coming?”

– Hawkeye to Quicksilver in The Avengers – Age of Ultron 

We learned about it during an Atlanta field trip years ago … and it made perfect sense then … and it still does.

After all, when a producer is driving hard and fast to execute on a high-stakes timeline to get a 9-figure film over the line …

… they’re deploying a LOT of capital really fast … and they need to get things off their checklist quickly.

Focus on the REAL needs of your customer and you don’t need to compete on price.

Lesson 3:  Primary drivers create secondary and tertiary jobs.

Even if you’re unable to get into the primary path of cash, there’s still a lot of opportunity to get in on the action … a little downstream.

When money is being drawn into a geography by a large enterprise or industry … the money flows through the primary driver to the locals.

So even though not all real estate investors are renting directly to members of The Avengers Endgame production team …

… there are plenty of employees of secondary local vendors who are also being paid out of the fat production budget.

Of course, it’s not just The Avengers Endgame budget, which is temporary.

The real driver is the CONSISTENT stream of production budgets drawn to Pinewood Studios.

But whether you’re deriving rental income directly tied to those production budgets via primary and secondary employees … there’s yet a third tier.

Even your tenants who don’t get paid directly from the production are working for the restaurants, shops, and other local businesses who serve those who are.

Just remember … it all starts with the PRIMARY drivers.

Pay attention to primary drivers and the rest will usually follow.

Lesson 4:  Always begin with the end in mind.

You may recognize this adage as one of The Seven Habits of Highly Successful People by Stephen Covey. It’s a powerful concept.

The Avengers Endgame is the capstone of a world-class case study in what “beginning with the end in mind” looks like in the real world.

Every film over a decade painstakingly added new characters and story-lines carefully woven together into a powerful tapestry of cinematography.

It’s a testament to thinking ahead.

Of course, there’s probably been many course adjustments along the way … as talent, opportunity, and even adversity, all manifested on the road to success.

In that regard, The Marvel Cinematic Universe is a lot like life and investing.

Yet very few folks we know are thinking that far ahead.  But perhaps they should be.

In the Create Your Future Goals Retreat, one important outcome is to define your personal mission, vision, values and most important goals … for ALL areas of your life.

With clarity of vision, you can make better small decisions about how you want to live and fund a life you’ll be pleased with when you put you head on the pillow for that very last time.

Take time to plan a happy ending for YOUR endgame. 

Lesson 5:  Big dreams take time to build.

In the 22 films from Iron Man to The Avengers Endgame, Marvel Studios patiently constructed an entire “cinematic universe”.

It made the concept of a trilogy seem tiny.  It was (and is) a BIG vision … and it took over a decade to develop.

In real estate, whether you’re assembling a powerful portfolio of properties or building a mega-million-dollar master planned development, it takes time and consistency to get it done.

Most people can’t think that big … and still pay attention to details at the same time.  And many that do, can’t stay the course.

But when you do, you have a chance to accomplish something extraordinary.

Think big.  Plan small.  Stay the course. 

Lesson 6:  Together Everyone Achieve More.

TEAM is a huge theme both inside and outside The Avengers Endgame story line.

From the first Avengers film, where a self-absorbed Tony Stark transforms into someone willing to make the ultimate sacrifice …

… to the violently divisive Captain America – Civil War and The Avengers – Age of Ultron where division nearly destroys the team …

The Avengers discover time and again their best chance for success is teamwork.

Of course, out in the real world, it took teams of writers, directors, actors, special effects, stunt people, production and marketing staff …

…  all working together with diverse skills, backgrounds, personalities and perspectives …

… to make The Avengers Endgame the BIGGEST box-office success in history.

If you have aspirations to build a great real estate investing business or portfolio … ESPECIALLY if you’re syndicating, you’ll need a team.

Build a great team.

Finally, to paraphrase Scarlett Johansson’s Black Widow when she unleashed The Hulk to smash the baddies … Go be an investing hero.

Until next time … good investing!


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!

GDP blowout pales compared to THIS market’s growth …

The Q1 numbers are in and the U.S. GDP came in at a robust 3.2% … MUCH better than expected. 

While it can be argued there’s some fluff hiding under the hood … with growing inventories masking lackluster consumer spending … 

… the financial media are describing 3.2% growth as a “big upside surprise,” “upbeat,” and a “blowout.” 

That’s a lot of excitement over 3.2% growth. 

So let’s shift to real estate …  

The Q1 numbers are in for tourism in the country of Belize … and after hitting an all-time high of 6.6% YOY in March (the 28th consecutive month of YOY growth) … 

… Belize’s first-quarter 2019 visitor arrivals grew 6.3%! 

In the parlance of resort property investing, that’s called DEMAND.

Of course, healthy demand is a key component of that all-important supply and demand relationship smart real estate investors watch so carefully. 

If you’ve already been on our Belize field trip, you’re familiar with the favorable supply and demand dynamic in Belize’s top tourist destination.

You also know big brands like Hilton, Marriott, and Coastal Living are staking claims in this exciting growth market and product niche.  That’s a BIG clue. 

Of course, we’ve been talking about resort property investing for quite some time. With boomers retiring every day, resort travel is a “booming” niche.

Resort property is a great way to earn rents from the affluent … while adding some lifestyle benefits to your real estate investing. 

So while the blowout United States GDP number is interesting to paper pundits … we think the significant and consistent tourism growth in Belize is much more exciting and actionable for real estate investors.  

Maybe it’s time for YOU to put on your sunnies, sandals, and swimsuit so you can …  

Join Robert Helms for an intimate guided tour of the resort property market of Ambergris Caye, Belize on our upcoming Belize Discovery Trip! 

Click here now to claim YOUR seat on the next Belize Discovery Trip >> 

You’ll LOVE it …


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


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Looking for trouble? You should be …

What do pro investors do when the market show signs of peaking?

They start looking for trouble … in a good way.

Industrial Property Owners Increasingly Go After Value-Add Projects – NREI, 4/19/19

“With prices for stabilized properties rising … industrial owners invest in value-add and redevelopment.”

In this case, the trouble is …

“The lack of land for ground-up development in many … markets …” 

That’s a supply constraint, which is a favorable problem for creating an equity-building supply and demand dynamic. 

That’s because when you can’t build more, what’s already there is potentially more valuable … IF there’s strong demand.

In the case of industrial property, there is currently very strong demand …

 “… the growing appetite for space” in the “red-hot industrial sector …” 

So troubled tenants need more industrial space, but troubled developers can’t find big lots of land to build on. 

The existing building inventory is apparently problematic in its current form … or those troubled tenants would be signing big long-term leases on them as is.

So that means more trouble.  This time for current owners of outdated properties which aren’t meeting the needs of the changing marketplace. 

Trouble, trouble, trouble, and more trouble … which all spells opportunity for someone. 

Of course, renovating huge industrial properties is a BIG stretch for a Main Street Mom and Pop investor.  These projects take many millions of dollars to get done.  And that’s a problem too.

One way to play is to invest in publicly-traded real estate investment trusts (REITs).  But as our veteran audience knows, we’re not fans of publicly-traded investments.

Publicly-traded investments are expensive to set up and operate … which dilutes profits to shareholders.  Worse, public shares can be “bet” against in the Wall Street casinos.

On the other hand, a well-run private placement (a syndication), pools the investment power of many small investors into a large, professionally run fund … just like a REIT, but without the Wall Street shenanigans.

So for passive investors, private placements can be an attractive alternative to REITs.  They’re just harder for Main Street to find … although it’s gotten easier and there are ways to find opportunities.

Of course, for active investors, syndicating is a great way to do bigger, more profitable deals.  It can make sense to share most of the profits with your passive investors because your small piece of a big pie can be very satisfying.

But you don’t have to be an industrial property investor to play this game.  In fact, you don’t even need to deal in dilapidated properties. 

That’s because you’re not looking for property problems.  You’re looking for people problems … or better stated …

You’re looking for people with problems you can solve … profitably.

Consider the plight of home builders …

New-home sales roar to a 16-month high on deeply-discounted inventory – MarketWatch, 4/23/19

It’s not necessary to get into the weeds on this one because national housing statistics are fairly meaningless.  There’s no useful “average” in real estate investing. 

If that puzzles you, think of it this way …

When you have one foot in near-boiling water and the other in near-freezing water, on average you’re comfortable. 

But in the real world, you’re in severe pain.

Real markets are LOCAL.  Problem ownerships are INDIVIDUAL.  Every deal is different.  Great deals and bad deals exist at the same time.  Same for markets.  They only average each other out in statistics.

That’s why there’s SO much opportunity in real estate investing.

Most other forms of investing involve buying the exact same thing everyone else has access to at the exact same price everyone else is paying at the particular time you invest. 

Those non-real estate investors can’t negotiate on an individual basis.  All they can do is attempt to time an entry or exit. 

Sure, some of the more ambitious might study fundamentals hoping to find something in the financials others are missing.

But most simply divine charts and graphs looking for signs of a “breakout” against trend line “support” or “resistance” so they can front-run a price move up or down.

Real estate investors look for problems they can solve profitably by adding value … one relationship and property at a time. 

And they know “value” is in the eye of the beholder … whether it’s the tenant, buyer, or seller. 

When you focus your attention on creating value for the other party

… you can charge more rent, reduce turnover, sell for a higher price, buy for a better price, or receive more concessions.

Learning how to identify exactly what with the other party wants is core to the How to Win Funds and Influence People sales training workshop.

While we could talk about adding value to tenants or buyers, for now let’s just focus on those new home builders who are dropping prices to move product.

Consider that some of those troubled home builders might be in markets with product types that would make attractive rentals … at the newly discounted price.

You and/or your investors might be able to solve a problem for the seller (the home builder) by buying not just one home, but several all at once … for a bulk discount.

If you’ve been around awhile, you may remember seeing this movie before … in the run-up to the 2008 financial crisis.

We’re not saying another crisis is around the corner.  But who knows?

So it’s probably smart to focus on properties and financing structures which emphasize positive cash flow.  This puts you in a better position to ride out a storm should one occur.

Remember … market peaks aren’t the time to speculate on further moves up … even if you get a great deal on the buy.  Hot markets can fade fast …

Recently Hot Housing Markets Now See Biggest Sales DeclinesBloomberg, 4/22/19 

Right now, interest rates are back down.  That keeps your mortgage payments lower.

Certain home builder … especially small ones … may be motivated to discount in order to move product in bulk. 

Lower interest rates and lower prices is a combo that helps your initial cash flow.

And if you find the right deal on brand new property … you’re less likely to have expensive repair surprises in the early years of ownership.  This gives you time to build up reserves and raise rents as the local economy may permit.

But whether you simply want to write a check and let someone else do the dirty work … or you’re the hands-on type who plans to find the deal and oversee it … 

When the market starts to heat up, it’s time to focus on building relationships with people whose problems you can solve profitably by adding value.

Until next time … good investing!


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!

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