How to select a RIGHT real estate market to invest your money. 

I usually spend a lot of time doing my own research to select a right real estate market.   I like to diversify my real estate portfolio and make sure that I have all the information that is crucial for me to make informed decisions.
Whether it is in our hometown or out of state, below are the main KEYS I look at:
1. Demographics
2. Location
3. Economic Growth
4. Population growth
5. Local Industries
6. Average property price in the location in question
7. High percentage of renters vs. home owner
8. Make sure monthly rental income is at least 1% of the purchase price

Keep in mind that finding a right real estate market is very important when buying your rental property.   It will allow you to minimize the negative impact in a down market while maximize gains in an up market.   Everyone will need a place to live, but if the job market is weak in the area, it means you will have high vacancy rate.  A stable job and population growth in a city with diverse companies will strengthen the local economy as well as the rental market.

Cash Flow from the Start

Your ultimate goal is to buy a property in a stable real estate market that produces consistent positive monthly cash flow.  Do not buy property and solely relying on future appreciation to compensate for current negative cash flow.   It’s very risky when we’re in recession or in the down turn market.  Do your math, and make sure you have positive monthly cash flow from the start.

Next step

You do some research to find out about the demographic of the market you are interested in, the average home price as well as the rental income it offers.  You want to look for the monthly rental income at least 1% of the purchase price.
For example:  if purchase price is $250,000, it’s important to get the rental income of at least $2,500/month.  If not, look for the next market.  I like to focus on a metro area with minimum of 500,000 or more in population.   These are the markets that I have invested in and will continue to have my holdings in Phoenix, Austin, Albuquerque and Houston.  Some of the cities that I may consider to expand my portfolio in the future includes Dallas, San Antonio, Jacksonville, and Tampa.

You can do a deeper analysis by city, population, demographic, etc.

These are my favorite sites that I use to look for a right real estate market:
https://en.wikipedia.org/wiki/List_of_United_States_cities_by_population
http://www.census.gov/quickfacts/table/PST045215/48303
http://www.EcoDevDirectory.com
http://www.QuickFacts.Census.gov/qfd/index.html
http://www.sba.gov/content/demographics
http://www.jparsons.net/housingbubble/

While real estate investments is not easy, it is not difficult either, but the more you educate yourself about real estate investing, the more rewarding the return will be and you will benefit from it for the years to come.

Please leave your comment below about your favorite real estate markets.