How to Analyze a Real Estate Market in 60 Minutes - Know More than a Local Expert - Neal Bawa

Mic Check you guys can you hear me fine awesome I am from the San Francisco Bay Area and I'm just thrilled to be here and before I start I want to say something that you know that may not be obvious to everyone especially the people that live here so if you how many of you are from Utah awesome I spend thousands of hours hundreds of them each year crunching numbers and I have to tell you something about your state I come here as often as I can every possible excuse I've broken every rule that I have to come here and do things here because this is an incredible opportunity your state for a number of reasons is in just the right place at the right time I encourage you to forget about some of the challenging times that your state has had in the past because your next 10 or 15 years are going to be absolutely spectacular so I had that message for you and you're gonna see a little bit of that in today's presentation but today's presentation is not about that let me start off by introducing myself unlike a whole bunch of the presenters here I am NOT real estate royalty I haven't flipped a thousand homes I haven't done a hundred loans I'm a technologist I had a regular tech job the regular tech exit and I happened to accidentally fall in love with real estate it happened through my regular job and then after a while I fell how you know head over heels in love with apartment or multifamily real estate what's nice though is today I'm not going to talk about multifamily at all they stuck the the word multifamily in front of my presentation I didn't do that they did the good news is everything that I'm going to talk about today first applies to single-family and then it also applies to multifamily but it's actually designed for single-family so even you can if you have a single unit a single rental everything I'm going to mention today works real-estate it's been really really good to me but it wasn't always like that real estate is a very challenging place it is the pinnacle of exaggeration it is the home of false promises it is the mecca of and I come from a background of data science of engineering where everything that we do the foundation of that is data and analytics so I was shell-shocked when I got into real estate because I found that many times data was not the foundation of anything here right they were using it to gloss over low returns to exaggerate they were using it just to muddy the waters and what I'm really sad about and this is not a happy story at least not at the beginning was I got into the same trap I exaggerated I told people tall stories I shoveled and my first set of investors suffered and I suffered more than any of them I couldn't sleep for for about a year I had not a single night of peaceful sleep and I came to my epiphany which was that the right path was the path that I already had received thousands of hours of structure education on and it was the hard and uncompromising path of data driven analytics driven investing and I made the decision to make a u-turn and it cost me a great deal of money and a huge number of opportunities that I could have made a terrific amount of money to go after that were not good for my investors and it took a while to get over that shock and I'm very very glad I did that because my life changed after that I became a national speaker I have 1800 apartment units the portfolio is a hundred and fifty million dollars I'm going to be adding 100 million dollars this year I have 300 investors investing with me about thirty of them get added every month to my network and none of that matters as much as the next statistic over 5,000 people around the u.s. use the research and data that I put together so that I can keep them away from the mistakes that I've made everything I'm gonna show you today is based out of the horrible mistakes that I made in my first project my father used to say something that stuck with me he said if there is a god he must be in the numbers God must be a mathematician and I believe that data can be used to improve everything in real estate there's no aspect of real estate that you cannot improve with analytics in my bootcamp I teach about 30 different data-driven strategies that can be used to increase profit and make you sleep well at night knowing that your property is in good hands and doing the right things today I'm going to take one of those strategies it's one of the most powerful and I'm going to teach it to you over the next 40 minutes the strategy is how to pick the best cities and the best neighborhoods in America even when you know nothing about that city at all you'll become an expert at the end of this process you'll be able to tell more about that city or neighborhood then a broker that has worked there for 30 years you'll be able to say those things you'll be able to write them down you'll be able to package them for your investors over the next 45 minutes I will not be using any paid tools every tool I use is free and available for everyone and when I'm done I'm going to send you a file that contains all ten rules that I'm going to give you I'm going to give you five rules of cities I call them real focuses and I'm going to give you five rules of neighborhoods and all of those I'm going to send to you in a word file and also in an Excel tracker that you can use I've already built a tracker simply follow the processes and plug in the numbers green orange red it tells you what you need to know makes sense so are you ready for your journey the planet data alright let's get started there's ten real focuses the first real focus is population growth I'm gonna read this off and then I'm going to demo it for you let me make this a little bit bigger just so that it's easier for you guys to see real focus one is population growth if a city is between a quarter million and 1 million in population you want a 20% growth in population between the year 2000 and the year 2017 now you might say well we're in 2019 well I want you to use that data because it's going to be easier for you to use 2017 when you're searching on Google so in a day in a moment you'll see why and I've given you let below that I've given you how to change this rule as each year passes because I expect that you'll be using these rules next year and the year after that and the year after that so I've given you those options but for the moment just focus on this fact between the year 2000 and 2017 any city that you want to invest in should have 20% population growth as long as it's a mid-sized city not Metro City the actual city itself so New York is both the city and also an MSA these rules are for New York the city not New York the MSA does that make sense not the metro so you're looking for that 20% growth now the city gets larger if it's over a million and there's plenty of those cities Los Angeles is a great example now you were that growth slows down because the bigger city it's harder to grow so it's 15% over those 17 years if the city is over 2 million people then 10% growth is acceptable obviously you're not going to get deals as good because larger cities lower cap rates right so that's your first rule and how do you figure out this rule well rule 1 is actually the simplest of all you just simply type into Google the words I'm gonna make this bigger again let's go plus plus plus plus oops too big about that you type in population space the name of the city comma the name of the state in this case I'm pointing out a city that many of you how many of you in the room have heard that Detroit is possibly turning around Detroit is turning around okay for any of you that believe that could you show me any point on this line where Detroit has stopped losing population any point no point so not only is this a city that has lost the greatest amount of population in the history of this country they were the largest city in America in 1959 right 1.7 million people and right now they're at some ridiculous number it's not a million I got to move this cursor over here six six hundred and seventy three thousand people imagine what happens to a city that has enough homes for a million seven and now that same city has six hundred and seventy three thousand people and each year it continues to lose population it's a little bit slower than before but it's losing population right why would you ever want to invest in a city that loses population consistently right everyone that is telling you that Detroit is turning around is trying to sell you something in Detroit or they're trying to get out of Detroit and get you in there right so the last thing that you want to do is invest in a city that is continuously losing population very simple straightforward rule and a lot of people know that rule but the key is you don't want to invest in a city simply because it's gaining a little bit of population 20 percent over 17 years Provo Utah is a great city to invest in going by this particular rule right here oops actually don't have that let me go back to Google actually won't have time to do that I want to make sure that I finish but if you check out Provo Utah it'll do just fine by rule number one remember there's ten different rules to go through here here's a city that I'm gonna use for my example I like using this city that's because a vast majority of my city rules this particular city is just on the edge right so it's right there for all of the rules so it's very representative so if you take a look at Columbus today eight hundred seventy nine people Columbus Ohio if you go back to the year two thousand seven fourteen the difference between the two numbers twenty one percent so Columbus meets that rule most of the Midwest does not the vast majority the Midwest is either declining population or very tiny increases in population now does this mean that home prices never go up there no there's this thing called inflation ever heard of inflation yes inflation should take up prices two and a half percent a year so over seventeen years any city should get about two three well twenty thirty percent increases in prices those are not increases inflation is reducing the value of your dollar so even if over seventeen years the home prices in that market go up let's say 30 percent the home prices are actually declining they're going down when you calculate the fact that your dollar now is worth less so everybody that's investing in Detroit is excited by the fact then they can make 12 or 13 or even 15% cash but here's the one question that you need to ask yourself if it's a city that in 1959 was a five cap city and now is a twelve cap city which means that everything's a lot cheaper what will the cap rate be when you exit wouldn't you lose every single dollar that you're making now on exit that means that you're forever trapped in a city that is losing population real focus number one don't invest in cities that lose population real focus - and by the way you you're welcome to write these down but I'm gonna give them to you in this word document you'll get this doc we focus to is median household income in the same city that has a 20% population growth you're gonna notice that that city has at least 30% median household income growth now these notice that numbers are slightly different it's not 2000 and 2017 its 2000 2016 why because we're gonna use a website called city data right now it's gonna give you 2016 data next year is gonna give you 2017 so you want 30% growth and we're gonna go to city data I already have this open city - data is a very interesting website and it gives you data for every city in the US and this data can create so much money so much profit Columbus Ohio scroll down and right here you're gonna notice the estimated median income in 2016 I'm gonna make this a little bit bigger there you go how's that estimated median income in 2016 was 49 and change it was 37 and change in the year 2000 the difference between those two numbers roughly 30% so Columbus gained 21% in population which led then to it gaining 31% in income because that gained in population created jobs and that jobs means means that employers had to pay more and you always have to pay just a little bit more than the population growth so 20% leads to 30% which then leads to real focus number 3 which is 40% real focus 3 says median household or condo value look for a 40% growth in median household or condo value between the year 2000 in the year 2016 so that 20 leads to the 30 which leads to the 40 let's look at what happened in Columbus and here I'm sure you're gonna try your own cities on this let's look at Columbus right below the median household income you see the median house or condo value right there right I'm gonna move this just a little bit so you can see what it was the year 2000 $99,000 where is it today or I should say in 2016 a hundred and forty thousand what's the difference forty one percent this is why Columbus is an excellent example because it is a Midwest City this is the part of the u.s. that is losing population but there's it's a gem in the middle of a whole bunch of cities that are not so awesome cincinnati has lost fifty thousand people the columbus cleveland has lost seventy thousand dayton ohio has lost a hundred thousand people to columbus so what happens in the u.s. is some cities steal population from other cities and those cities you'll notice that when they start sealing the population their crime levels go up down their education level goes up this is consistent orlando is stealing population from everything around it even though the rest of florida cities are growing because Florida has the largest inward migration of any state in the Union so there are people moving all the time there but there are people moving from other cities in Florida to Orlando the biggest reason simply being a category 5 hurricane becomes a category 3 hurricane by the time it hits Orlando hey important reason right real focus for is about crime real focus for states that on the city data website you want to make sure that the city that you're investing in the crime number and I'm gonna show it to you in just a second is lower than five hundred lower than five hundred and this applies for cities of all sizes so it doesn't really matter if it's Los Angeles or Oakland or Provo Utah you want crime numbers to be under five hundred there's a there's a tip here that I'm gonna give you when I actually show you how this works so remember that city data page we're gonna scroll down a little bit and we're gonna keep going until we see a blue colored table come on there we go keep going keep going keep going blue table coming up right about hang on not the fastest internet guys so I to wait for the page to catch up come on oh there goes blue table now I wanted to look at this big table and I want you to ignore all of it I just want you to look at the last row the last row the one in blue right here's the number that we want to look for I actually don't just want to look for a number under 500 I want to see a number that's declining from left to right what does that mean the city is the crime levels are dropping so on the left it didn't make it Columbus Ohio 15 years ago was a crime-ridden City but because it's education levels have been draw have been going up crime levels have been dropping so this is a perfect example and you know what I really like about Columbus is how smooth this drop is take a look 57 717 701 686 continuously whatever the heck this city's government is doing it is all working it is all working to boost the city now this is the only city in the Midwest with a ranking of about 400 everything else is high crime here's an example Memphis 900 st. Louis 850 the troit 850 massively high crime levels why does that matter for you crime levels are tied to delinquency when you are a landlord the biggest thing that destroys your profits is delinquency eviction costs and then the rehab that comes before you can put in a tenant that can completely destroy any and all dollars you make that's why so many of these destroyed Detroit properties don't pencil out the rents are there they're real but every seven months they stop paying and then you've got first delinquency then you've got eviction costs then you've got two or three months where they're staying for free or sometimes more and then after that you spend 1500 ollars to rehab the damn property just to get it ready for the next one and all of that money that you made is lost and delinquency is very highly tied to crime very highly there are cities in the u.s. that are on my top 10 list I have obviously this allows you to do this for any city in the US but people ask Neil have you already picked pick cities and the answer is yes I'm gonna give those to you as well there are cities that are over 500 in that list the most popular example a city that I've talked about for years is Orlando the reason I make an exception for Orlando is it has a very large decline in crime so it was over 800 on the left and it's now 550 on the right so to me what is important is not just the amount of crime but the rate of decline if it's a very rapid rate and the city's not quite at 550 yet you should still look at it right so there's a few other Midwest cities are like that Grand Rapids Michigan is an excellent city to look at and shows up in my top ten list very often because of a decline in crime our very highest spectacular de crime decline is crime so that's real focus number four change in crime levels real focus five in my mind is the most important and it is job growth and job growth is all about what happened today you do not give a damn about job growth over a three-year five-year or ten-year time frame job growth is spot so you want to look at the last 12 months of job growth in that particular metro this is not a link from city data don't don't worry you're gonna get the link it is from the Department of numbers it's not a cool website Department of numbers calm and even though our government takes many many years to do things apparently we're not gonna get our IRS returns for years just because the government shut down for 30 days but the one thing our government knows how to do well is calculate job growth numbers because they have to pay out Social Security so guess what these numbers are very current so I'm going to click on this last row I'm gonna sort by this row and then I'm gonna make it bigger so you can see what the worst city in America to invest in is it's not Cleveland Ohio it is Cleveland Tennessee now I'm gonna click the other way to see what are some of the best cities in America to invest in from a job growth perspective that one at the top definitely is not the best anyone can guess why Midland Odessa and its twin or actually Midland Texas in Odessa Texas are not good cities to invest in well that's right these two cities are consistently either at the top of this list or the very bottom of this list and they tend to go back and forth right why because when the price of oil hits 70 or 75 Midland and Odessa fill up with a whole bunch of miners if the price of oil drops below 60 maybe 55 then the city's empty out so those are the most dangerous cities in this list that you should never absolutely never invest in the rest of those cities really make sense Reno Nevada an incredible city to invest in Colorado Springs is part of my twin cities trend I talk about cities that benefit from a larger city Colorado Springs benefits from Denver that's right Sacramento benefits from the San Francisco Bay Area Tacoma benefits from Seattle that's right those cities have long-term benefits because their cap rates are so much higher than that the main city that over time billions or tens of billions of dollars will flow to them the most powerful one of these sets is actually not a set of two it's a set of three Orlando and Tampa are the most powerful cities in Florida at this point of time and right in between the two cities is an unknown city called Lakeland Florida which at this point is realtor.com number one city in America to invest in why because it's equidistant and you can live in Lakeland and go to work either in Tampa or in Orlando those are extremely powerful places to invest in so as you go down the list you will see st. George I have tried and failed many times to buy in st. George it's an incredible area Orlando no doubt about that Gainesville a lot of powerful cities are going to be in this list I've just lost a bid actually we we turned that bid down we didn't lose the Athens bid it just didn't work for us but that's an incredible city to invest in and guess what here it is Provo Utah one of the most powerful economies in the u.s. in its size class is Provo Utah if I go down a little bit lower you're gonna see Salt Lake you're gonna see Ogden you've already seen st. George at the top of this list Utah has incredible potential you should be investing in your own state so short answer is this list is very long it actually goes to fairly small cities I do want to bring up a caution related to what you mentioned when it's a very small City you've got to look at the numbers for a bit longer because sometimes a single employer boosts them to the top and then they go back down later so the cities that have consistently been in the at the top of the list and this list changes every month so right so you get you do get to see that progression if you're following it for three or four months you want to see if the city actually stays on top if it's a single employer it'll drop off very rapidly after a couple of months so I see Provo there all the time Las Vegas has been up there for about four years Phoenix is very much at the top of the list we're investing in all of these cities by the way Houston goes up and down so it really depends on the price of oil and what's happening there Houston has been boosted by the hurricane because a massive amount of insurance money came in a lot of new units have been built someone asked me someone in this room did they ask me about Huntsville Alabama yeah there you go that is a good market that's because it's gaining a lot of jobs it's got other problems Lakeland Florida is in that list halfway between Orlando and Tampa Seattle's always in the list because it has a lot of jobs but it's not going to do so well on some of the other criteria and it's also a very low cap market so some of these obviously may not may be so expensive that you may not be able to invest in them so those are your five city real focuses the other countdown time do it Steve do I know how many minutes I have left okay perfect thank you I'm gonna switch to neighborhoods all great cities have really awful neighborhoods Phoenix is a perfect example has some absolutely terrible neighborhoods and I and I were recently recently accidentally exposed to one that was not a fun experience and so it's it's not just important to pick the right cities if you want to really ride the wave you've got to get the best neighborhood and I'm not saying the best neighborhood but it's got to be a decent neighborhood what you don't want to end up in is a D neighborhood in an ACD because it's still not going to work for you so let's talk about real focuses the first real focus for neighborhoods is median household income but before I tell you about this real focus I want to tell you how you figure these out back to city data so we're gonna go back and take a look at Columbus and we're gonna scroll up this time we passed a map a very interesting map you guys see this map this is an incredible map it has amazing information most people just look at it and they just move on but the map is absolutely stunning when it actually finishes loading it's incredible because what it's doing is this map is showing you and at the very top left you can see the words median household income what it's allowing you to do is to look at any city in the US or any neighborhood in the US and basically look at it as a gradation of color dark means higher income the light means lower income and what it does is it takes the city and breaks it up into little parcels and how does it define a parcel well everything in that parcel resembles everything else around it but then all of a sudden half a mile things are very different right maybe more expensive or less expensive it makes it a different parcel so it breaks the city up into chunks not done yet okay well we're gonna refresh loading data I find that if I do this to my computer it actually works better there uh I'm proving theories as I go this is impressive all right so that red line is the city lights limit line and what I'm about to show you actually doesn't work well in most cities outside city limits so these rules of thumb are really designed inside the city limits where there's lots and lots of little neighborhoods right so you see lots of little tiles it works it doesn't work outside to the left do you notice these huge gigantic areas well one rich farmer could mess up all of the numbers there right one guy that's a hundred million dollar farmer is gonna mess up all the numbers so follow the rules inside the red lines not outside and even inside the red lines if it's a big block it may not work but the massive majority of time where you're going to be looking to buy is going to be in those small blocks because they have a much larger population make sense now the first thing that I usually do is I go whoops this is not there we go like this look at this options box I'm going to click on it and I'm gonna drag it all the way just to make it easier to see now when I'm done I want you to remember this same options box you're gonna come and drag it the other way because you want to see the names of the neighborhood's after you selected them and those neighborhoods are only visible when you drag the slider the other way and now you can see the names of every street the name of every freeway and the names of the actual neighborhoods so take a look it's easy to figure out what's the richest part of Columbus right it's that part that's darkest is that where you're going to invest in Columbus no because that's the lowest cap rate in Columbus it's gonna look like it's gonna look similar to what the San Francisco area looks like which is insane just for the record I think that most real estate investors in the San Francisco Bay Area Teeter on the edge of insanity with their to cap rates all right let's go back I'm gonna go zoom this in a little bit and I'm gonna click on that area well lots of challenges with trying to get this just the right size let's see if I click on this where does it go no I still need to zoom back down okay so I'm going to zoom down and I might have to read some of these numbers back to you will do the squint test alright so I clicked on that super rich area part of Columbus you can see how rich it is and you may not be able to see this I'm gonna read it off to you this box is showing you incredibly useful stuff all of the five neighborhood real focuses are inside this box at the very top it's going to show you the zip code which is super important because that's what you're gonna use there and then it shows you the income level for the people that live there so the median household income for this part of Columbus is a staggering two hundred and thirty thousand the median home is six hundred thousand dollars there is no way that you can get anything that cash flows here if you're purely an appreciation person you still wouldn't like this because it's already appreciated a great deal so this is not a great market to invest in what's a great market to invest in the markets around it so you're looking for markets around it and you're looking for some specific numbers and that's what the real focus is our real focus one for neighborhood says that you're looking at a neighborhood where the household income number is between forty thousand and seventy thousand forty thousand on the lower side seventy thousand on the higher side anybody guess why you don't want it to be higher than seventy a lot less renters so it turns into single-family and then very low cap rates right you're welcome to do it you're just not going to get much cash flow right so if you're a purely an appreciation investor I would say go from 70,000 to ninety thousand those are great appreciation no cash flow markets but the vast majority of you are looking for cash flow right we were looking for cash flow forty to seventy is your sweet spot now how did I figure out that forty thousand dollars well my back indicates that the moment you drop below 40,000 dollars in income your delinquency spikes it spikes once at around $40,000 and then it goes completely insane at 30 when you're investing in a neighborhood that is under thirty thousand dollars you will never make any money at all because your delinquency will destroy all of your all of your rent dollars it's it's I I believe I can even do a challenge to see if anyone actually makes money under thirty thousand what's sad is that a significant part of all turn-key products are in those market so you're seeing all these turnkey products now I have to say one of the reasons I'm figs fan is these guys they do their research one of the top markets in the country that I had identified that I tried to build in was Meridian in Idaho they already knew about it six months before I did their markets in Houston are excellent obviously they knew about Provo because they got started here those are amazing markets so a lot of there are good people in real estate that are doing this research but a lot of the turnkey providers when they're peddling you stuff in Memphis it's in a 900 crime area so beware of what's being offered on the internet because people are not doing this research and now you have the ability within five or ten minutes to actually be able to tell whether these are in good places or not so keep your median household income between forty and seventy thousand dollars that's real focus one oops go down real focus two in the same box is the median contract rent and you want the median contract rent to be between seven hundred and a thousand dollars same problem you go over a thousand you can have cashflow issues because you it those homes are really expensive you can go to a thousand fifty in certain markets on the lower side never ever go below 650 you will not get 12 months of rent so you know there there's trackers that I'm building where I'm adjusting different levels what I'm finding though there other than the Midwest where you can go down fifty bucks no matter what the cost of living is I do see a very tight band between 700 and a thousand with the exception of really expensive areas like New York Seattle Los Angeles those kinds of areas are you know obviously the band is different but the significant portion of the u.s. 90 95 percent of the u.s. is in a very tight 700 mm band that's where most of the money will be made for most of the rentals that it's true of Utah as well real focus 3 in the same box is unemployment rate now this one's a little bit tricky because it's not a number that's in the box right it's not an actual number in the box there is a number there but you can't use it you have to know one other number so what you have to do is you have to go to Google and whatever city you're looking at let's say Columbus Ohio you're gonna type in the words Columbus Ohio unemployment rate right now let's take a look at what Columbus Ohio is unemployment rate is and here we go Columbus Ohio unemployment rate I'm gonna tell you it's gonna be very low there I worked again all right so it's 3.5% at this point what I want you to do is do not invest in areas that are more than 2 percent higher than the city's unemployment rate so in this case what's your cutoff limit five and a half it's okay to go up two percent you might say why should I go up to a percent I want to go down from the city's limit no you don't because the the class areas are going to be two percent right you're still looking at Class C now if you're looking at Class B just stay with the city's level so in this case you would want three point five percent if you want Class B property if you want Class C which tends to cashflow better look at five and a half percent now in the middle of a recession you can expand that to three percent but at this point with a robust economy you do not want to be higher than five and a half why because when the recession hits if you're a ten percent today you're gonna go twenty or twenty five percent when a recession hits at that point you'll be upside down and unable to pay your mortgage so stay at that 2% level you'll be fine remember our goal is not to basically get rid of every neighborhood in the u.s. we want to invest and when you're investing you are taking some risk there are lots of great classy neighborhoods in America the method the point is to find them not to eliminate them so you can only invest in Class B because what good would that do us there's not much cash flow here but I've found thousands of neighborhoods around the u.s. that match these numbers the next real focus so before I give you the last two real focuses I want to make sure I don't run out of time so I'm gonna tell you now how to get access to this data this spreadsheet you like the colors yeah you can see the real focus is there and on the left you can see a bunch of cities that you can play with so I've given you a lot of cities there we go Columbus Ohio is at the top Phoenix San Antonio it's a lot of interesting cities here I've also put in some clunkers so you can see the difference st. Louis happens to be in there that's a clunker Memphis in some ways is a clunkers it's got some opportunity there but the goal is for you to basically look at these cities the ones that you like and then simply follow the steps that I've just used and plug in the numbers and it's gonna give you a color and tell you where you stand so you get this excel spreadsheet you'll get this word doc the one that mentions the rules and also gives you the exceptions large cities all of that stuff and something else that I think is very valuable for everyone each year at the beginning of the year I lock myself away and spend about 500 hours doing research it's a great time because a lot of companies come out with their reports that tell you exactly what's happening in the marketplace there's single family reports and multi-family reports after I'm done I take that research I first build it into a trends presentation you're not watching a transparent you're watching a workshop but what if you wanted to know what were the 10 cities for 2019 I've got a list what about the multifamily cities to invest in for 2019 I've got a top 10 list what about the cities to build in for 2019 I've got a list that trans presentation also basically points out the biggest trends of the year it's already recorded it's already sitting here and for those of you that are too lazy to watch the presentation the PowerPoint deck is on the right so you can just do it over five minutes I've never been guilty of doing that ever below that are the videos that I want you to watch because I want you to know and some of these are multi-family some of these are single family and there's key items and each week I add a video here so every week I look at videos on the internet and I find one that is interesting I'm looking for something about affordability affordability is a big dragon that can end our party and so I'm looking for one in 2019 I had some really good ones but you should see one one or two there these articles are very powerful the impact of tax reform is hitting blue states incredibly hard yes five minutes five minutes is good the affordability crisis that is affecting the United States you will learn amazing things the most impressive article though is this one future homeownership Meyers and Lee this is a very credible group of people from the University of California that are pointing out that there are no known scenarios in the US for the homeownership rate not to decline they have three scenarios the bad the worse and the catastrophic there are no evening out scenarios the homeownership rate has dropped for 13 successive years and though it's taking a little bit of a breather because the Millennials are peaking this year it will now drop for 31 successive years during that time eight million new renter households will be needed that we just don't know how to build this is why the story of renting is incredibly powerful and it's not going to be the end of the world in 2015 our homeownership rate will match Europe's it is not going to be the end of the world but it is going to be the greatest opportunity for those of you that can buy apartments from fig or from my company it's going to be the greatest opportunity this report can be read in about 30 minutes and it will change your mindset around what's gonna happen to America in the next thirty years there's lots of real estate ranking reports all updated for 2019 these are all trends everything from forecasts to what's happening Maps stock market crashes outlooks and then there's a dozen events by a bunch of very powerful speakers on different aspects of single-family and multi-family we add a new one every week and then all of the resources that I've used for this particular presentation are in there the comparison worksheet and the real focus focuses for cities and neighborhoods so you just click on him and feel free to use them and then for those of you that love multifamily my favorite section at the bottom is for people that are interested in either small or large multifamily now keep in mind the Quad Plex is that fig cells are not in that range because my world starts at five units so these resources are for five units or greater does that mean we don't have resources for fig no Spig applies for single-family so all of the things that I've just mentioned to you work for figs quad flexes just fine in fact the stuff that I gave you today actually works better for single-family than it does for multifamily the only benefit we have in multifamily is we have this amazing 18 months of future warning when is city spikes in rents or Venice City spikes in prices eighteen months later the wrench will spike so I actually if I follow single-family trends I know the future and this works a hundred percent of the time that's because that city becomes so expensive that there's a whole bunch of people that say we cannot buy there anymore and it takes 18 months for the wrench to start spiking so if you have 18 months of warning built in follow the single-family market and go into the ones that have the highest appreciation and you're a lock down the line for high rents so all of this is available to you it's it's free and always will be free you pick out your smartphones I mean let me skip past this here it is so text the word our toolkit the word our e toolkit to that to the number 4 4 2 2 2 so when you when you're going into the texting you're typing in the number 4 4 2 2 2 that's the actual phone number and then in the message the message that you're sending is re toolkit one word no space and when you if you do it correctly you're gonna see a prompt when you see that you'll get access to the trends toolkit please remember I updated every single week before I finished with the last two what I'm doing is following these trends using multifamily I have this incredible 18 month early warning system that I'm using and I'm going into the best markets you just saw them I have a property in Vegas I'm gonna sell for 4 million dollars more than I projected to my investors have 300 plus investors we're buying properties in Atlanta which shows up at the top of this list I've got a property 3 miles away in Provo and with that I bought three years ago because I knew this would happen in Provo and that building stays rock-solid at a hundred percent occupancy all the time even though I'm constantly raising rents this system makes an incredible amount of money for those of you that are interested in passive investment please do come up to me and talk with me for those of you that are interested in learning about 20 times more than I've showed you go to this website it's multifamily you calm write that down multifamily EUCOM and click on the bootcamp it's only for people that want to be active because it's a lot of work to do this but you want to be active click on multifamily or comm and click on the bootcamp now let's finish off with the last two focuses for neighborhood and real focus for says you do not want the poverty level of the neighborhood you're clicking on to be anywhere near 20 percent above 20 percent the same delinquency dragon is going to swallow you alive just so you know I don't usually do anything above 15 obviously I'm a fiduciary of my investments my investors money so I have to be a little bit more careful personally I I'm willing to do 20% some of the areas in Ogden Utah that I've looked at to buy my own properties are at 20% but there's so many great things happening in Ogden right now that I'm willing to do that but with my you know investors properties I prefer that the poverty late rate be below 15% and most of you if you're a conservatively conservative you want to pick below 15% so you don't see an insane amount of delinquency all of this stuff that I showed you is in that black box that comes up as you click around the city in Columbus the highest was 230,000 do you know what the lowest is the the income levels $6,000 $6,000 in Columbus as you can see is a great city to invest in so knowing this stuff is so important $6,000 is a condemned area no one ever pays rent there all the buildings are empty what is most amazing and I'll leave it to you to click around Columbus I'm sure you guys will be doing some playing around I challenge you to find that area the biggest thing that you'll notice is 750 yards away from that area is an area with incomes over a hundred and fifty thousand dollars real estate isn't local real estate is hyper local it is hyper local 750,000 demmed area is an area with a hundred and fifty thousand dollars in income that is why this stuff is so incredibly important to learn and it only took 40 minutes let's look at the very last one unlike all of the others this one is subjective all of the others I gave you numbers for this one is subjective in the same black box is a pie graph that pie graph shows you the ethnicity mix in that neighborhood it's not a good thing for that pie to only have a single slice you want there to be a fairly large second slice it doesn't really matter what ethnicity that slice is but you want to slices because you do not want to only be pitching the whites you do not only want to be pitching to blacks you do not only want to be pitching to - to Mexicans you want to have a mix because that greatly improves your ability to get your units rented so here's a bad one big circle filled with one color and two very tiny slices here's a good one big circle right 75% of that is one ethnicity and then 24% of that a really nice quarter slice is another Anissa tea and maybe there's a third one even there the best kind which is hard to find is one that really has three big slices because units there are incredibly easy to rent because you're you're going out to three completely different audiences so look for that and you'll have no problems at all renting your properties those are all of your real focuses at this point what you've learned puts you in the elite class of investing I haven't found a broker yet in all the years that I've been working on that actually knew even half of these rules at this point you don't need to say okay I need to learn more what you've learned here if I had learned I mean things would be different for me now and in the end I think that I benefited from this and I hope you do too but what you've learned here is more than enough to put you instantly into the top 1% of all of the investors in this country and I'll take your questions now yes I have and I find that there's almost always a correlation between the income levels in a university there's only one problem because there are very poor students living there sometimes when I'm clicking on the neighborhood's around they have very low scores and so they're misleading because their students their income levels might be five or six and they're not even really filing returns so what I'm finding is that immediately around a university my neighborhood rules don't work well right once you move a mile away from the University everything starts working again more questions yes yes certainly not something I can teach in 40 minutes so I teach that in my boot camp actually I no longer teach it yay Anna Meyers standing back there teaches underwriting she's a wonderful underwriter I have to say it definitely will take more than 60 minutes to do that if you're doing a single-family deal I think that there are a lot of great tools out there but the moment even if you're underwriting a Figg apartment complex if you're doing it right it's gonna take you more than 60 minutes to do that one so what's nice is each month Anna underwrites a multifamily property a new one and then goes through all of the terms and the underwrite of that property on multifamily ucomm hundreds of people attend each month and learn how to underwrite these properties from her check it out so actually I have a good rule for that but for once that rule is not a city rule you don't look at seedy sides sizes you look at the MSA the metro so 250,000 people in a metro is the minimum that you should look for even though the individual city like Saint George wouldn't qualify for 250,000 in the city but qualifies for 250,000 as a metro so quarter-million people yeah I absolutely am it's automatically factored in because real focus five four cities is jobs as long as you're following the jobs today there's no evidence that the jobs of today are going to be different in different cities from the jobs of tomorrow the cities that are currently gaining jobs are not tier 1 metros the cities that are going to do really well in that list were not the San Francisco Bay Area they weren't the Seattle's the the cities that are actually doing well our tier 2 metros and those cities actually work really well for rentals so it's it's the Phoenix is the Orlando is the Boise Idaho these are the cities that are doing fantastically well and that's because a lot of Technology jobs are going there well those are the same jobs are going to grow over the next 15 years use real focus 5 you'll be you'll be safe we've tried and the short answer is aziz are so ridiculously different from each other that makes no sense some states like yours utah did a really great job none of the opportunity zones in utah is ad market but some of the states like Michigan put B markets in Detroit there is no way in hell that any investor with half a brain is going to invest in those markets so when we create those rules of thumbs we have to be very subjective in terms of how smart were the governors of these states so if you want to look at Ozzie's you should look at Arizona Utah California did a good job actually in picking said and it's really easy for OCS to map out in California with million-dollar homes all around the uzi so obviously California has a big advantage there but a lot of cities did not do well there are there are lists on the internet of the nine percent of Opportunity Zones that will do well find those lists apply the same rules you'll do fine yes.can can't cover that in a 45-minute presentation but when you come to the bootcamp we give you lists of states and yeah California does not do well at all not even close now well I'll give you a lazy answer to that each year I pick the cities where the trends are the strongest that's the presentation that's on that page that I showed you this isn't a trends presentation this is a snapshot presentation how is this city doing now how is this neighborhood doing now but the trends presentation covers future trends Orlando for example is a trend about I talked about that has everything to do with climate change logistics companies are moving their locations from all along the corridor except for Jacksonville which is a city that's protected from hurricanes you've got all these cities along both the eastern and the western you know the sea line we're logistics companies are moving inward because they're they're afraid of hurricanes those are trends and trends can't be covered in this kind of a presentation you could have a city with a horrible trend that would look really good here because that trend is future looking so the short answer is a separate presentation that really looks at the trends in the US and how they're affecting everything the San Francisco Bay Area has a horrible trend called affordability crisis which will prevent their rents and their prices from increasing for decades final question last question um I think Miami has many challenges but also it has very severe shortage of construction so it shows up in the middle of our lists it's neither good nor bad if you live there or have contacts there I think it's a good place to invest in just be aware that from what I'm seeing the water is gonna come much sooner than the predictions so if you have a ten-year plan at the end of the ten years your cap rate might be much higher if you're very close to the shoreline okay I'll take that as a last question hopefully enjoyed this thank you

Channel: Multifamily University

Views: 68,304

Rating: 4.9431877 out of 5

Keywords: grocapitus, atlanta, How To Analyze Real Estate Markets, Find Best Cities Real Estate Investing, Best Cities Real Estate Investments, Best Neighborhoods Real Estate Investments, Best Cities Real Estate Investment, Real Estate Investment, Real Estate Investing, Free Real Estate Investing, Data Based Investing, Apartment Magic Bootcamp Atlanta, Neal Bawa, Neal Bawa Real Estate Analysis, Real Estate, Investing, Grocapitus, Grocapitus Real Estate, Real Estate Housing Market, Multifamily

Id: J-5akkEKzG0

Length: 57min 54sec (3474 seconds)

Published: Thu May 02 2019