My real estate partner and I have researched, studied, and worked in the real estate industry as investors for many years. We are always looking for ways to better our business and ourselves, and recently, we took steps to expand into a new real estate market to scale operations. To make the growth process one that was smooth and efficient, we followed four practical steps, and we wanted to share those steps with you. I hope that you can gather some insight by reading about the steps that we took to successfully grow into new markets, and that you will be able to apply it to your business growth.
Choose A Market
It was important for my partner and I to pick an additional housing market. This would benefit us in that we could scale our operation and increase our diversification. We honed in on three markets and took the time to go to each market, drive through the neighborhoods, and physically see the areas we thought could be a sound investment. My opinion is that it is always a good idea to take a trip to wherever you plan to invest (unless you have someone trustworthy that you can delegate this search to).
Do Your Research
During the time that we spent visiting our three-time markets, we also researched the key economic factors for the cities. While performing your due diligence, some great questions to include are:
- What large corporations are headquartered in the market?
- Is the market a buyer’s or seller’s market?
- Are people moving into the market or are they leaving?
- What is the “job situation” in the area?
- What is the crime statistics like?
Media always includes a lot of hype, so look for the best data, speak with local experts, and test the feelings on the street. You’ll learn a lot from what the real estate markets are like simply by listening to casual conversations at the gym, overhearing talk at coffee shops, and observing the activity at real estate offices. Become a little outgoing during this process as well and talk with the locals..they will tell it to you straight
Find Your Tribe
It’s important that— when considering expansion into new real estate markets— you assemble a strong team. My partner and I, during our growth into new markets, met with LOTS and LOTS of specialists. These experts included property managers, investors, contractors, and so on. You’ll also want to find good lawyers, title closing agents, inspectors, insurance agents, and more. Don’t try to do it all on your own. Be sure to delegate out tasks that others can do better than yourself. Put together “your tribe,” and do that in advance. It will help the process of transitioning into new markets much more smooth. For us, we found that BiggerPockets was a great resource to help us find the “right people.”
Discovering the best contractors to advance your business is one of the biggest challenges in real estate investing. I took the strategy of showing up at Lowe’s and Home Depot to scout talent. If the contractor drove a brand new 2017 pickup, that was probably not our guy. We were searching for a contractor who wasn’t just interested in making a chunk of profit on one project, but someone who made their living spread across high volume projects that we could bring to the table. Finding a good crew is a constant and ongoing process, but we have been “lucky” to keep some great candidates in our pipeline.
After finding which market out of the three that we wanted to focus on, we submerged ourselves into learning the neighborhoods. We observed which areas had the most upside, then began taking action. We found a centralized office and moved forward in the hiring process; bringing key team members on board that will add value to the company as we grow. We added a real estate agent who would start making offers on properties. Some of the offers we made in our target neighborhoods have been accepted, and we are closing deals.
Our expansion was focused on Dayton, Ohio. It’s a place that shows increasing job growth and unemployment lower than the national average. This city offers the potential for high cash flow, as well as the opportunity to hire a good local team.
Wherever you decide to expand, take steps to reach your goal, do your research, study the trends and real estate investing articles, and ask mentors for advice.