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Welcome to The Executive Real Estate Investing Show. This podcast is for you, the busy business owner or executive looking to create generational wealth. Here, we’re going to show you how to do that through real estate investing from multi-family to industrial and everything in between. You will become a real estate investing expert, and now, here’s your host, Michael Holman.

Welcome everyone to the second episode, The Executive Real Estate Investing Show. I am your host, Michael Holman. Excited to get started with you, excited to get learning about investing in real estate, and guess what? While episode one was a little bit of the benefits, and the “get to know you” and all of that. Episode two, we’re getting into the good stuff here. This is where things get exciting. This is where we get analytical. This is where we get into data. This is where we start having fun and really honestly, learn how to invest in real estate. So, let’s get into this.

Today’s executive tip is really, really important, and it relates to what we’re doing. So, the executive tip for today is focus on the data. What I mean by that is it’s really, really easy in real estate investing to get emotional. There’s a lot of gurus out there. There’s a lot of hype, right? I mean, you have people showing off all the money that they’ve made. You’ve had people telling you how you can get ultra-rich off of real estate, too, with no money and no anything and no knowledge. Right? You need to be able to cut through all of that. When you’re looking at investing in real estate, dig into the data. Focus on the data and the factors that are really there.

We do this on every single one of our investments. We spend thousands of dollars getting feasibility studies to make sure that where we’re building makes sense. We do CoStar reports. We do rental analysis. We do land comps. We do sales comps. We do construction analysis on what’s being constructed. So, focus on the data. If you let the data drive your decisions, you’re going to find yourself making better and better decisions rather than just trying to jump right in.

Now, the flip side of that. Don’t allow yourself to get analysis paralysis. Okay. Focus on the data. Once you have the data, trust it. Make a decision, and that’s your executive tip for today.

All right. So, today we’re going to talk about one of the most commonly talked about aspects of real estate investing out there. I get asked it time and time and time again, especially by new investors, and that is, “What markets should I be investing in?” I get this question constantly, and for good reason, right? It’s almost one of the main things of investing in real estate.

When you are going into your first investment in real estate, especially, and you’re trying to understand what market, I mean, the natural thing to do is just invest in your own market. Yeah. I mean, when you don’t really know, you kind of just assume all the markets are the same, but that’s wrong. And the second you get into it, and you start looking at the data, you realize how wrong of a statement that really is. All markets are not created equal. There’s benefits and cons of each market, and we need to get into those. We need to start learning about them, and we need to help you become a better investor.

To get started here, the first thing that’s really important when you’re looking at markets, each market is different. Each market has pros and cons. So, the things that I say, the markets that I invest in, may or may not be the right markets for you, but I want you to understand markets in general and real estate markets and how they’re different and how they vary across the entire country.

Okay. So, what I did here with this podcast, I went in, and I did a ton of research. I gathered information from all different kinds of reports and sources and websites and all these credible sources to help you understand the differences in the markets. So, we’re going to get right into this, and we are going to get into the data right now. Specifically, I’m a big multi-family investor and developer. Okay. So, specifically, I’m going to take you through some of my thought process in looking at multi-family markets that I want to develop in.

But here’s kind of the whole thought process. So, I’m going to walk you through this. Okay. And if it gets a little boring, I am sorry. There is nothing boring about real estate investing, but the data is important, and sometimes the data isn’t as flashy as everything else, but it gets you to the right answers, which is what we’re trying to do here. Right. We’re trying to become better real estate investors. We’re trying to take our busy lives and our hard-earned money that we made selling whatever it is that we sold, and we are trying to figure out how to create generational wealth.

So, the first thing I did, I went, and I looked at a report released by WalletHub for real estate rankings in general. This is just general real estate rankings. I’m going to run you through this. This list is broken out by large cities, mid-size cities, and small cities. By the way, we’re going to be talking about a lot of reports here. Know that all of these reports, you can find them in the show notes. So, if you feel like you want to dive into a report that we talk about here even more, totally good, totally understandable. Go to those show notes, click on the report. You can see the whole report on what we’re talking about.

WalletHub released the top-ranking cities for real estate, and these are by size. So, they put large cities in here. They put mid-sized cities in here, and they put small cities in here. They vary, but I’m just going to run through some of these. This is general. This is coming from a report, so I’m not giving any opinions here. We’re just going to go through the data.

Large cities, they have Seattle, Washington. Nashville, Tennessee. Austin, Texas. Colorado Springs, Colorado. Denver, Colorado. Charlotte, North Carolina. Aurora, Colorado. Fort Worth, Texas. Mesa, Arizona, whoo-whoo, and Tampa, Florida. By the way, I’m not from Mesa, but we do a lot in Mesa, so I had to give a little shout-out.

Okay. Mid-size cities, now, we’re looking at this. We’ll go, Boise, Idaho. Frisco, Texas. Gilbert, Arizona, right next to Mesa. Durham, North Carolina. Tacoma, Washington. Cary, North Carolina. McKinney, Texas. Tempura, Arizona. Vancouver, Washington, and Tempe, Arizona. Okay, those are the ten.

So, we’ve gone through large. We’ve gone through mid-size. It’s important because each of these have different classifications, and there’s different pros and cons to investing in a small city versus a large city. You get into the small cities. I’m not going to go through this list very much. Needless to say, I’m looking through this list right now. We got one from Tennessee, right at the top. We’ve got a couple of Washington’s. We got Surprise, Arizona, and some Texas. Right? So, I get that right? Tennessee, Washington, Texas, Arizona, and there’s one from California. So, Roseville, the only California market to make it on here. Congratulations, California. So, now we’ve looked at the best, just overall real estate cities or outlook for real estate. Okay, great. Good place to start. Step one.

Now, we’re going to go dive down into step two. Once you understand, generally, where real estate markets are, you really got to define it into what it is you’re looking for, and because of that, I decided to go and show how I was analyzing markets for apartments and multi-family specifically. That’s our main thing. We do other things, but I’m mainly an apartment guy, so that’s why I narrowed it down. But if you’re interested in self-storage, you want to narrow it down for self-storage.

Because, for example, what was number one on the list? You had Seattle, Washington, number one on large cities. Okay. I don’t know this. I’m just using a hypothetical because I’m not investing in Seattle, but apartments in Seattle might kill it. Self-storage in Seattle, not so good. It might be worthless. So, it’s important to understand by asset class.

Okay. So, looking at apartments and keep that list kind of in the back of your mind because we’re going to meld it all together here at the end. Keeping that list of best real estate markets in your mind, now we’re going to go in, and we’re going to narrowly define. So, we looked at a report. This is put out by Arbor. They basically score large multi-family opportunities by city, and this is specifically what we do, 100 plus units up to I think our largest one in development right now is 320.

So, I decided to look at large multi-family units, and this is specifically, large multi-family opportunities by city. This report takes in a lot of different criteria. It’s a great report. It does lending volumes, market size, labor market, really important in multi-family, personal mobility, rental performance, all these things. They even included COVID because we’re still going through that. So, if you’re reading this in real-time, you understand that. If you’re reading this two or three years down the road, I have no idea if COVID’s still around, but for this purpose, it’s taking in COVID, and here’s the ranking.

Number one, Seattle, Washington. Number two, Phoenix, Arizona, followed by Austin, Texas. San Antonio, Texas. Dallas, Texas. Man three, right in a row. Portland, Oregon. Baltimore, Maryland. Denver, Colorado. Minneapolis, Minnesota, and Columbus, Ohio.

So, I read you that list. Now, as you’re going through that, and you understand that, think about some of the similarities here. Phoenix, Mesa, Gilbert, those areas all showed up here. Seattle showed up here twice as number one on both lists. Gives you something to think about. I might have to start looking at Seattle with all of this. Texas, a bunch of cities in Texas are here on the list.

So, you’re starting to see these similarities as we go throughout this, and like I said before, you can go through, you can look at all of these reports on the show notes. So, don’t worry about trying to memorize all of this. You can go in and see these all for yourselves.

All these two lists so far, what they do is, they only give us a good indication, where the market, in general, is going, what’s happening in general in the market. But we can’t stop there because there’s certain factors that go into all of these. Like right now, take right now, for example. A factor that’s an honest-to-goodness factor in real estate markets is COVID. The good news is with apartments, it’s not affecting apartments as much as we thought it was going to back when this started over a year ago, but it’s still going on, and there’s still potential effects.

So, it’s important to look at some of those major things, and some of this just involves common sense and using your head, right? I mean, just thinking about what’s going on in the world that might affect real estate.

So, we decided to come in. We went and pulled another report, and we’ve simply said, “All right, we want to know what cities are best poised to recover from COVID-19.” Once again, you can find the list. It was posted by Forbes, but just to give us a general idea, right? They didn’t rank them. They simply just gave ten best lists, and they sorted them alphabetically. So, this isn’t by ranking, but let me read some of these to you. Boise, Idaho. Denver, Colorado. Durham, North Carolina. Madison, Wisconsin. Provo, Utah. Raleigh, North Carolina. Salt Lake City, Utah. San Jose, California. Tucson, Arizona. Washington DC.

Once again, another similarity, right? You have common threads throughout all of these reports pulled from different places. Okay. The good news with data is, as you start looking at it, you start analyzing it. You realize there’s these common threads that you should start looking at.

One of the favorite phrases that I’ve heard in real estate is, “Live where you want or need to live, but invest in real estate where it makes the most sense for what your goals are.” That’s what we’re trying to do here is gaining an understanding of these markets that might make the most sense to be investing in. Like I said, I’m taking this specifically for apartments, but if you’re interested in industrial, you’re interested in retail, do the same kind of exercise.

So, they also listed the worst ten cities. I won’t go over those because, to be honest, I just don’t want to make anyone feel bad from these cities, but needless to say, if you go through this list, pretty much none of them are in any of the other lists. So, that’s good news. Okay.

Here’s what I’m going to do now. All right. We’ve been through these lists. We’ve seen this information. Okay. I’m going to give you my recommendations, and I don’t have a magic eight ball. I don’t know exactly what’s going to happen in the future. But I’m going to give you my opinion on where we’re at in some of these markets and where we’re going. I’m going to tell you where I invest and why I invest there. Okay.

So, another thing to keep in mind, we’re looking at markets broadly. Okay. We’re not getting into metro’s as much, and that’s really important too because real estate is very location-based and location-based not only from state to state, metro to metro, but even city to city, or area within a city compared to another area within the same city case. So, just keep in mind, we’re keeping it a little bit broader in here. We’re keeping it a little bit more general, and I’m doing that on purpose. Later on, and in a future episode, we’ll start getting into metros and how we analyze metros and now what we do once we found this big, broad area that we want to be a part of. Okay.

Here’s some of my conclusions from what I see, just in general, and I may or may not be invested in some of these markets. I can tell you I’m not invested in all of them. I am invested in some. Here’s my recommendation. Based on the list that I just went through, what are the areas that make the most sense?

I mean, to me, Arizona. Especially in Maricopa County, right around Phoenix, Mesa, Gilbert, Surprise is on there, which is West of Phoenix. Arizona and especially Maricopa County seems like a place that’s poised to do really well in real estate investments. They’re poised to do well in relation to COVID. They’re poised to do well in relation to real estate in general, and they’re poised to do well as far as large multi-family. So, Arizona, especially right around Maricopa County. If I’m interested in investing, that might be an area I’m going to look.

Another area that I’m probably going to look at, Idaho. Especially Boise, right? Boise was one of those ones that kept showing up. Throughout this entire process, Boise State was an area that kept showing up time and time and time again. It’s a different market, and there’s different things compared to like Phoenix. Phoenix, I might be interested in putting a 500-unit multi-family development down there. I might be a little more hesitant in Boise, Idaho to put a 500-unit development. I might put a 200- or 150-unit development. But Idaho, especially around Boise, that’s a market that appears to be doing well. It’s showing up time and time and time again.

I got two more markets here. Okay. The next is Texas. Texas is riddled throughout this list/ Texas appears to be doing really, really well in regard to real estate investments and the potential for future real estate investments. I mean, looking through this list again, I’m going through it right now again. I can’t even pinpoint a specific city or area. It’s just like all of Texas. Makes me think I need to get in Texas. I’m not in Texas right now, but basically everywhere in Texas. I mean, Austin, Fort Worth, McKinney, Denton, Allen, Dallas. I mean, Texas is all over the place. Looking through that, if I were interested in Texas, I’d probably be looking at Austin, Dallas, San Antonio, some of those areas, but those are areas that appear to potentially be doing really well as far as real estate investments. Okay.

Two more that come up on this list for me. Utah. As far as cities poised to recover well from COVID, Utah shows up twice in that list, actually. In relation to how big Utah is, it appears that Utah is going to do really, really well in the coming future. Now, Utah didn’t make many of the other lists, and it’s probably, maybe, because it’s a little bit of a smaller market. I don’t know, but Utah is doing really, really well. I kind of lump it, Arizona, Utah, Idaho. A lot of those are right together, and you want to know the last one on the list is hilarious, but last on the list is Colorado. Utah, Colorado, Arizona, Idaho, all right next to each other.

So, you start looking at migration patterns. You start looking at the real estate in these areas, and it’s just an area that’s doing very, very well. Okay, and these aren’t regional reports. These are reports that take into account the entire country and areas of the entire country. So, that is my analysis, just going through the list, making those assumptions.

Now, I’m going to get into where I personally invest and why I invest there. The good news is most of the places I invest is actually on this list. I’m investing in two areas right now, mainly—Utah and Arizona. Specifically, Maricopa County in Arizona. Those are the two areas that I am looking at. The reason that I am investing and developing in those areas constantly is because of a whole myriad of reasons. But the general real estate market in those areas really good and really strong growth potential.

That is what I’m looking for. I’m looking for, here’s what the market is right now. Here’s where the market’s going to be in five years. I’m looking for those areas that have the most potential to grow and to become real estate powerhouses in the future. So, that’s what I’m looking at.

The reason I focus on growth is because I’m a developer, and as a developer, I make my money off of building an asset for less than the market value. Some of these assets, I mean, I have a 116-unit multi-family in Southern Utah that took about 14 months to build. We’re going to start a 240 unit in Mesa, Arizona. That’s going to take 18, 24 months to build, and I want to capture the growth that exists and that happens in that 18-to-24-month period.

So, if I can find markets that are growing, markets that appear that they’re going to be better off or a lot better off in two, three years down the road, then where we’re at right now, that’s really good for me. That’s why I focus so heavily on those growths because I want all that appreciation.

I mean, I mentioned, we have a project down in Southern Utah or in the St. George area that’s 116 units and multi-family. From the time that we did our underwriting to the time that we opened our doors, rents had gone up on average 5% to 6%, and that’s through COVID. Everyone was expecting rents to go down. They did in some areas. Rent stayed the same in a lot of areas. We were above the regular national average during COVID because it’s such a high growth area, and so that’s really important to me.

So, that’s why I invest where I do, and those are the factors that I’m looking at. So, as we’re looking at these markets, and you’re listening from all over the country. The thing that I want you to recognize, and the thing that I want you to know, is that you can invest in these other markets. There’s a lot of different ways to invest in these markets, but it’s getting ingrained. It’s getting an understanding of what’s happening in those markets, whether you live there or not.

So, that concludes the second episode of The Executive Real Estate Investing Show. Glad to have you. Glad that you could come, excited to see you next show. Talk to you later.

Thank you for listening to The Executive Real Estate Investing Show. Ready to learn more? Go to executiveREIshow.com for more episodes and resources to help you create generational wealth through real estate investing. That’s executiveREIshow.com.