“What is market analysis?”

Over the years there have been a lot written about real estate investing and how to get started. There have been volumes written about creative financing, but how do we get started. When we talk about becoming a professional investor we need to understand what are a professional investors and what do they do different than the hobbyist investor.

Professionals begin by understanding the market. So let’s start from the beginning what is the market and is there a way to understand it?

The market could be as large as a city or as small as a neighborhood. In fact we should consider that we could track trends on a larger level such as state and regional levels, but when it comes right down to it we should keep our market analysis on a city-by-city level or smaller.

The reason that we keep our analysis on a smaller scale is because the factors that we look at for market analysis can change on a city-by-city level (see further articles for details). What we are really trying to do is to gather the data necessary from a neighborhood, city, etc to find out if it is a good place to invest. Meaning is the property too expensive and the rent too little to create a positive cash flow? Is the crime rate too high? Are there enough renters in the market to keep our property full? And may more factors that we need to take into consideration as we analyze our market.

Let’s look at it from a different angle. If we don’t know what our market is doing then there is a good change that we are going to lose money. This article is being written as our country is going through some tremendous changes economically. A new president has just moved into office and there is a sense in the investment community of lets wait and see.

There is a danger in that approach because potentially if we really understand what is happening in the real estate market then we can take advantage of what is happening instead of waiting for someone else to tell us now is a good time or not to invest.

by Seth Joiner