I spend a lot of my time speaking to new investors. It’s part of my job. Finding out what makes investors successful or, more importantly, what they are having problems doing helps me to improve the support HomeVestorsⓇ provides to our franchisees. Understandably, one of the things we talk the most about is finding a great investment property in the hottest U.S. real estate investment markets. That’s a big question, for both newer and experienced real estate investors alike. Everyone has their own tricks of the trade, but there is no “secret” method for finding properties with potential, but there are principles that can help guide you.

HOW TO SPOT THE HOTTEST REAL ESTATE INVESTMENT MARKETS

Up-and-coming neighborhoods are often the best places to look for real estate investments but you need to know how to spot them. Here are three factors that I like to share with new investors to help identify the best real estate markets to invest in. I’ll also tell you where which real estate markets are the hottest for this year.

LOOK FOR PRICE REDUCTIONS

Successful investing means buying low and selling high, of course, but you need to know what’s behind the low prices. Price reductions may signal a weak housing market, but they often don’t give the full picture. The market may be falling or about to turn around. This is especially true in urban areas, where revitalization can change the face of individual neighborhoods or tremendous swaths of a city.

We can see how this works in very different locales. Detroit, for example, is a city, famous for its rock-bottom home prices. But, it experienced a respectable 6.1% increase in home prices in 2018. Cleveland, another market considered “weak,” also saw dramatic price jumps in some areas last year. The factors that contributed to the changes in both markets were highly local—like the emergence of new employers or government revitalization efforts. A keen understanding of the local economic influences can uncover the hottest real estate investment markets in the unlikeliest places.

KEEP AN EYE ON POPULATION GROWTH

If the population is growing, the demand for housing will rise, and property prices are likely to rise as well. It seems an obvious factor, but it’s often overlooked. Perhaps it’s because the effect on the housing market is not always immediate or dramatic. While slow, steady growth is the sign of a healthy market, you want to be on the lookout for areas of the country that are on the verge of a population boom.

According to the U.S. Census Bureau, five of the 15 large cities and seven of the 15 small cities with the fastest population growth in the U.S. are in Texas. Texas, therefore, may be among the most promising location to invest this year. Not only did the state survive the recession relatively unscathed compared to the rest of the country, but job growth in its metropolitan areas is strong. Austin, the national growth leader, is becoming a tech hotspot since Apple, Dell, and IBM all have opened offices there. These jobs have drawn more people into the housing market who can now afford to buy homes that you sell. If you are new to investing, you might already be priced out of the Austin market but there’s plenty of entry-level investment opportunities all across Texas.

TRACKING JOB GROWTH

Speaking of creating new jobs, job growth and unemployment rates are the final factors I recommend you consider when deciding where to invest next. If a city’s economy is strong and the number of jobs is increasing, housing prices are likely to go up as well. Of course, a strong job market has a ripple effect. Not only will people move there for work, but the residents who currently live in the city are going to be better positioned to buy homes that you buy, renovate, and sell.

So where are the strongest employment rates? All over the country. There are a number of ways to look at this question. A recent exhaustive survey of net employment outlook—or, the percentage of employers anticipating an increase in hiring activity minus the percentage of employers expecting a decrease—showed a preponderance of Southern and Western cities. But, Boston is among the Top 15 as well. What might be most striking is how much job growth is taking place in smaller cities. A survey based on five years’ previous growth shows similar results, as does a survey based on 30 current indicators. If you are not looking to invest in a major city, this is the factor to watch.

The type of property you should look to invest in will be determined by the types of jobs available as well. In Houston, for example, the largest area of job growth comes from the construction industry. Typically, construction workers moving to a different part of the country for work will be middle-aged adults with families. As a result, they’re probably going to be looking for family homes in the suburbs. Seattle is a different story, however. With the number of tech companies in the area, individuals moving to the city for work are much more likely to be younger Millennials. If you are looking to invest in Seattle, then, should think about apartments in the heart of the metropolitan area or properties near to the campuses of the tech giants.

FINDING INVESTMENT OPPORTUNITIES IN THE HOTTEST MARKETS

Even if you know the best cities to look in, finding a house with potential can still be competitive. But, it’s a little easier if you are an independently owned and operated HomeVestors® franchisee. By leveraging the nationally-known and trusted HomeVestors® brand name and the “We Buy Ugly Houses®” marketing you’ll be able to access a wide range of qualified leads in just about anywhere you want to invest. Contact HomeVestors® today to find how.

Each franchise office is independently owned and operated.