​As an out of state investor, one of the questions that I am often asked is; "how do you decide where to invest?".  That is a great questions with some very important answers since the difference between choosing a good market and a bad one can make or break your investments.  As with all other investing decisions, it starts with defining your situation, goals, and risk tolerances. 

• How much money do you have to invest? It takes a lot more cash to invest in LA than Cleveland.
• Are you primarily seeking cash flow or equity growth? Different markets provide different opportunities.
• Do you have a competitive advantage in a certain market? (i.e. local knowledge, family, investing team)

Once you have a good idea of your goals and strategies, it is time to start analyzing individual markets.  The more you can stack the odds of success with you, the better.  To do this, look for stable or growing markets that have a diverse economy and positive outlook.  Here are some of the key criteria that I look for when comparing markets:

• Population growth - Look for cities that are seeing significant population growth.  Real estate follows the basic supply and demand rules.  If demand is increasing, rent rates and sales prices will also be increasing.  I like to see a steady trend of 1% - 1.5% annual population growth.
• Job growth - Usually job growth goes hand-in-hand with population growth, but do some research to see how the unemployment rate is trending.  What companies are there and are they growing?  Are new businesses opening or relocating there?
• Job diversity - Markets where a high percentage of jobs are provided by one employer or even one industry can be very risky.  If that company or industry sees a downturn, layoffs could be devastating for the real estate demand.  I look for a good mix of manufacturing, tech jobs, health care, tourism, service, and government jobs. 
• Income growth - You really want to see that the local economy is strong and wages are growing.  It is hard to raise rents and/or sale prices if wages are stagnant.  
• Housing price growth - Strong long term growth in housing prices generally indicates that demand has been solid and the local economy is trending upward.  Personally, I would rather see slower but steady growth over the long term.  Markets that make quick, huge jumps tend to make quick huge falls too.
• Rent increases - Same concept as home price growth here.  You want to see a steady trend of rent increases that can continue into the future.  Rent increases are usually required to maintain your margins as inflation and expenses increase.
• Poverty decline - This metric will tell you a lot about the direction the local economy is heading.  A decline in the poverty rate means more people are finding quality jobs and can afford to rent or purchase your investment.
• Vacancy stabilization or decline - Vacancy is one of the biggest killers of profitable investing.  Look for markets where the overall vacancy rates are stabilized or declining.  If the rates are increasing, it means demand is waning and could be a warning of worse things to come.
• Tax rates - Tax rates can have a massive affect on your profits.  It is worth some research to learn how properties are assessed, what the local rates are, and if they are trending up or down.  
• Price-to-Rent ratios - This is a very important metric to compare how cash flows will compare in different rental markets.  It compares the ratio of home prices to annualized rents.  Obviously, markets with high prices and low rents will be hard to cash flow and vice versa.  

These are just a few of the key metrics to research before choosing a market to invest in.  The more market knowledge that you are armed with, the greater your chances of success.  I have seen people have success in declining markets but why handicap yourself right from the start.  Find some areas that you are interested in, have a good economic outlook and dig in to the details.  There is a ton of information available online but visiting in person is really helpful.  Here are a few good sites to get you started:

• ​www. city-data.com
• www. bestplaces.net
• www.census.gov
• www.deptofnumbers.com

If you are interested in further details or investing in other markets, reach out to me so that I can provide way more in-depth details and help you find something suitable for your goals.

​Home equity loans are an attractive borrowing choice because you get the best of both worlds: the freedom to use the funds for anything you want, just like you would with a personal loan or a credit card, but without the high-interest rates and fluctuating payments.
 
But given the current economic and global pandemic state, Americans are looking into different ways to receive extra cash. If approved you can use it to pay debts or home repairs but you can also use it to cover unexpected medical costs. Sadly, due to COVID-19, this could be a big factor to get this type of loan. Yet, it’s important that you know what has changed for home equity loans during this pandemic.
 
A new rule from the Consumer Financial Protection Bureau speeds up home equity loan closings if homeowners are struggling because of the COVID-19 crisis. But the pandemic has led some lenders to pause applications for home equity loans, and others have enacted stricter lending standards.
 
This credit tightening is due to a number of factors. The unemployment rate climbed to the highest rate in history, reaching 14.7% for the month of April, with over 23 million people out of work. With unemployment numbers changing weekly, lenders are having to request multiple employment verifications, some as late as the same day of closing, to ensure a borrower’s creditworthiness.
 
Other changes banks have been making include increasing the required minimum credit score, requiring a higher down payment, and placing caps on the amount of money the bank is willing to refinance.
 
HELOCs have also been affected by these stricter loan requirements. Not only are banks increasing credit score requirements, they’re also limiting the amount of money they will lend for a home equity loan as well as lowering the percentage of the home’s equity they are willing to lend.
 
Despite the difficulty in getting these types of loans, you can still find lenders who are accepting applications for both cash-out refinances and HELOCs although, according to both Molitor and Wilson it may be easier to access a HELOC at the moment. Before applying with any lender make sure what their requirements are to see if you qualify, and make sure the loan you’re applying is the right choice for your needs.