How to Find The Hottest Real Estate Markets - Neal Bawa's Location Magic 2024

0:00 [Music] well welcome everyone this is a presentation that we do once in a year we talk about how to find the hottest real estate markets and even though that's the name of this presentation we end up talking about a lot of different markets at the end of this presentation so there's a huge list of markets let's call it 200 markets at the end of this list and I pick out some of the ones that I like today I'm going to be picking out a um a city called fire bille I want to show you just how ridiculous its numbers are fville or fville in Arkansas so I'm going to pick that one out but I I'll talk about about another 30 or 40 cities I'll give you some tips and I'll also bring up the two cities that we voted for you know grow capitus voted for as the best cities to

0:46 invest in for 2024 so we'll mention those they're not technically part of this presentation they're part of a different presentation that that we did a few weeks ago but I think it's worth bringing up U those two cities as well in this presentation um and typically what happens is I do this Slide the ones that coming up onle screen and we talk a little bit about ourselves but I want to do this a little bit differently today so I am going to show you this slide so so this slide it just blows my mind I want you guys to understand what has happened in the United States because I don't understand why there aren't a thousand headlines about this okay so you look at this chart right so here in August 2020 a few months after covid started a few months

1:34 after Co started right the average home price in the United States was right here 74 right so look look back at how reasonably priced homes were in 2012 This Is 2020 a few months after covid this is August 2023 the average home price in the United States is now close to 115k and just so you know in the last four months that number has gone up not down I'm sorry Neil not the average home price what buyers must earn to I'm sorry what buyers must earn sorry that you're correct so this is the earning sorry so in August 2020 you needed to earn 74k or 74 and a half K thank you Anna and today that number is shocking right you so your income in three and a half years

2:20 roughly needs to have gone up by $40,000 to own a home in the United States and that number for some of you who live in you know expensive cities may not be a lot but this is the average in the United States right I'm going to show you what the number has gone up by in San Francisco I I live in the San Francisco Bay area and I used to live there right so this is this number is so mindboggling that most people can't get their hands around how difficult it is to own a home right and so let me pick some cities right so San Francisco is obviously the poster child of how expensive it is so in 12 months the income needed to buy a median home in San Francisco has now gone up by $100,000

3:06 $100,000 in just this time frame the last 12 months right so it's gone up from $300,000 which is outrageous 300,000 median income to 400,000 medium income right it's just absolutely nuts and there's so many places in the US where people are like I don't want need to live in San Francisco I'm going to live in all these cities that are doing well they have you know higher growth than than uh the San Isco Bara what cities there's nothing left there's nothing left in the United States that is what I call inexpensive cities Phoenix you can see 12 121,000 right year-over-year Phoenix is up 14% 14% in a single year your income needs to go up 14% well average incomes according to chat GPT and Phoenix only went up 2.1% in the last year us average 115k and

3:53 it's gone up 15% year-over-year right and and the median income of people that are actually buying homes is 75,000 so the Gap is so astonishing I cannot think of a time in the last 50 years and please tell me if you know of a time that's better than that where this has happened this threeyear bizarre change and obviously you think well you know prices are you prices will come down they can't stay up that High I mean interest rates have been over 7% for nine straight months and during those nine straight mons where interest rates were over 7% home prices have gone up they haven't come down because there's no Supply and there's likely to be no supply for several years because of what we call the Locking effect you know my mortgage is locked in at 1.75% so I really can't

4:38 move because right now if I move my mortgage is going to go up from 5,000 a month to $16,000 a month I can't afford that so I'm not going to move 30 million Americans are locked in they can't move so their homes don't come on the market and so very little is on the market so that puts a floor under prices so as a landlord and I'm not talking about you know investing with me and Anna you can go do this yourself I I just can't imagine a better time to be a landlord because we've now in three and a half years completely destroyed any chances that roughly 18 million to 20 million American families had I got that number from chat GPT because what I the question I asked it is what percentage of the United States in terms of families and what count are now priced

5:24 out compared to the day before covid and the answer it gave me is it's likely to be 18 to 20 million families with those 18 to 20 million families they're not just priced out for now they're forever renters so while you know the US has a lot of renters we just added $2 million uh 20 million families to that number that's mindboggling not in my career and I've been building real estate since 2003 when I built an office campus to buying real estate since 2008 I've never seen anything like this and I just don't think it gets enough attention that this is a horrible thing for America and an amazing thing for landlords so I'll start my presentation with that for those of you that don't know me uh and and I we are um syndicators data

6:09 scientists we buy and build properties throughout the United States we do all kinds of stuff multif family student housing Self Storage industrial there's about 5,000 investors that attend our multif family webinar series there's a hundreds of you attending right now this is actually is not even our most popular webinar because we do it every year we share a lot of IDE and thoughts and technique by which you can go out and buy and data by by which you can basically go out and you know buy properties maybe you'll buy them with us and these are examples of maybe a third of our portfolio maybe a fourth of our portfolio our portfolio is about uh a billion dollars as built or you can go buy them for yourself I think what I tell investors what I love to tell to

6:57 them is TR at least to buy one or two single family rentals yourself don't leave all of your dollars in the hands of Neil bwa or other Neil Bas right it's it's very good for you to be able to contrast being a landlord yourself versus investing into syndications with companies like us I think that's a very good practice so do both and hopefully today we'll give you some interesting ones but if you do them with us I think you'll do well these are just the average annualized returns that you can see so in green you can see what we achieved in in you know orange you can see what we um what we projected and as you can see these numbers have been absolutely phenomenal for the exits we've been having now some of these exits they were phenomenal for the primary reason that

7:43 you know the market was very high but we just had two exits one in December one in January of so December last year January of this year and those were also phenomenal exits and we're actually more proud of those because we had to deal with you know all that interest rate increases and the cap rate increases for those two properties so so very proud about um about the two exits and we'll update this slide for you uh later so as you can see our uh many of our investors um a lot of our investors are repeat investors they've invested with us two three five 10 times um and uh they have good things to say about us in case you haven't invested with us before now one of the things that we do is on our website there's a testimonials page and we have lots of videos from investors and those are really worth seeing so if you're considering investing with us now you might want to go to grow cap.com

8:28 that's the website right there um and clicking on the testimonials page um just uh two cents from a lawyer I am not an investment advisor neither is Anna so this is an educational webinar every investment involves risk be aware of your risk tolerance uh level you're free to accept or reject all the investment recommendations that I'm going to make I'm going to make a truckload of those today um and everything subject to Market risk and that our recommendation is not a guarantee of successful performance so do lots and lots of due diligence and when you're done do a little bit more due diligence so don't invest our money your money on our recommendations alone housekeeping um we will send a recording of this out it might get sent out tomorrow it might get sent out on Monday uh and that recording will actually have the PowerPoint deck

9:15 that you're watching and it'll also have the Excel spreadsheet that I'm going to be using throughout this presentation so both of those will be in there so just watch you look for the button that gives you access to those and yes we'll take questions at the end all right so we talked about this $115,000 median income 18 to 20 million more um you know uh people that are basically forever renters and that's what's created the opportunity so when I was doing this in 2008 I'm I'm a data scientist so I started asking this question of how can I compare cities in the United States against each other how many cities are there in the United States I didn't know the answer to that question there's over a th cities there's 323 metros or msas in the United States and my my question was I want to invest in the one that's the best and

10:01 people said there is no best you know you just sort of invest in the area that you live in and I wasn't satisfied with that answer because that's not an answer for a data scientist we don't think that way right I wanted to find out which cities were the best and so I started doing a ton of research and over time I came up with a set of rules these are not perfect they're rules of thumb they seem to work a majority of the time tens of thousands of people are using these rules at this point in time in fact there's 13,000 people taking this course right now on udemy.com 13 a little over 13,000 people and so it seems to work fairly well for almost everywhere in the United States it's designed for single family it also works for multif family it's not not designed for any other asset class so don't apply it to Self Storage don't apply to Industrial don't apply to mobile home parks just single

10:48 family multif family and I think you'll have good success so I came up with five rules actually we came up with dozens of rules that we use internally but the five that I've I'm giving you here are the vast majority of what moves the needle so the others that we have moves the need needle a little bit but it takes too much time and too much effort in my opinion I think most of the real gold is in these five rules so my first rule as you can imagine is population growth and I'm going to give you some numbers and they may seem random but they're not I change these numbers every single year um population growth if a city is between 250,000 people and a million people in population most cities in the US that you would be investing in are going to be in that 250k to a million range then you want a certain amount of population growth in that City

11:34 what is that number well for this year 2024 that number is 11.2 next year you can come to our website grab this PowerPoint and the number might go up it might go down a little bit so and those numbers are between two specific Years 2012 and 2021 and before you tell me we're in 2024 I know but what I'm trying to do is to give you access to publicly available data and I've run simulation s and obviously there's nobody that can give you data for 2024 yet we're at the beginning of the year but there is data some data available for 2022 and 2023 my experience is if I go out and spend thousands of dollars buying that data I end up with the same list of cities why because population growth doesn't change over years it changes over decades cities just simply don't you know have

12:22 massive spurts of population unless something bizarre is going on with those cities like a new Amazon headquarters other than that they it's a pretty smooth level of growth so the fact that you have access to publicly available data through Google uh only up to 2021 is not a problem you're still going to end up with the same list of cities whether you buy $2,000 worth of software or you get it from Google all right so large metros are different so on the screen you can see some large metros for those that number that I gave you the 11.2% Well it has to be about 7% in that time frame because LGE cities don't grow as fast as small ones now what about the cities under 250,000 people right I gave you the number for 250 to a million well

13:08 then I give you the number for cities over a million now I'm going to give you a number for cities below a million and for below a million that number should be 15% growth in that time frame why because smaller cities are riskier well if you're taking the risk you should have the reward so you want you know and there's plenty of smaller cities out there in the US right if you want to get the best well in that case you know 11. 2% is not enough you want to go up to 15% now this number that I'm going to give you I'm going to show you how to use it and I'm going to give you an Excel spreadsheet it'll be really simple you don't need to write anything down by the way so 11.2% this number applies to the second half of 2023 because that's when we updated these numbers and to the entire year of 2024 it doesn't apply to 2025 so a year from now if you want to apply this you'll come back here we do this presentation you can also send us

13:54 an email and we we send you the this deck with a slightly different number my guess is 11.2 might go up to 11.6 or you know or it might stay the same but it's not going to move too much all right so so that's the the first number that I wanted to show you and before I go on to the second metric I want to show you where do you get this number from so I'm going to escape out of PowerPoint and I'm going to open up a fresh Tab and I'm going to type in the following words population Columbus Ohio this is the city that I use for my examples it's really a perfect City to use for examples right and by by just typing these three words population space the name of whatever City you're looking for and whatever state you're looking for so you could be typing in population green Bill South Carolina or population Myrtle Beach South Carolina that's fine right

14:41 the same sort of chart that you're seeing on the screen is going to come up right which is awesome right now you notice that this chart only goes up through 2021 because publicly available data on population growth is through 2021 right so you can see this city Columbus there's a reason why I like it so much I call it the Jewel of the Midwest that's because it beats the absolute crap out of every other city in its state and lot lot of times I like comparing cities within the same state and Google likes it too because you're seeing three lines a blue line a green line and an orange line well the Blue Line's Columbus and you can see it's going up and the uh Cleveland is the green line not only do you see it going down have you noticed something every

15:27 time there's a recession right one here one here Cleveland loses population to Columbus so when the going gets bad the people in Cleveland leave and they run towards Columbus here and then also here you see this these spikes that happen in Columbus means that at that point in time because Columbus continues to gain jobs during bad times and Cleveland loses jobs people leave Cleveland now the third city is interesting Cincinnati one of the great cities of America America you notice that this city basically is flat now whenever a recession happens people never leave Cincinnati this is the definition of what is called steady Eddie if you like investing in Steady Eddy cities Cincinnati is a great one and probably

16:13 has good prices as well but Cleveland even though it has really inexpensive prices may not be the best city to invest in because do you want to invest in a city that is continuously losing population and that the city that has been losing population continuously from 19 1990 to 2021 for 31 straight years there hasn't been a year that Cleveland hasn't lost population I want you to keep that in mind doesn't mean that there aren't good deals in Cleveland all I'm saying is you may not you may not get deals as good as you want and my second and third data point I call them real focuses will really really give you a sense of that right so within the same state you can have cities that are doing really well blue Columbus or cities not

17:00 doing so well green Cleveland and that's that's something that I emphasize that you know the the real estate is is micros specific right the same thing's happening in Arkansas Little Rock not doing so well but fville which is you know 150 miles north is doing really well and this happens all the time so you have to be aware of it and that's what the the real Focus system was designed so how do you use it well there's an Excel spreadsheet you're going to get access to this well I go in and I plug in two numbers the 2012 population and the 2021 how do I figure that out well very simple I Mouse over all the way to the right and you see a number you see 906 528 I'm going to type this in here 906

17:46 528 H enter and then population in 2012 I move the cursor back back back back back back until it says 2012 and it says 812 872 so I'm going to go in and type in 812 872 you notice the population growth is 12% over this time frame now what did I tell you it should be what was the number I gave you 11.2 which is why you notice that the cell in this Excel spreadsheet has turned green just nice visual impact saying yep thumbs up right so real Focus number one population growth Columbus does really well Cleveland obviously is going to do really terribly because there is no population growth there's a negative population it's losing population so if you plug the Cleveland

18:33 numbers in here you'd get something like -6 or minus5 or some number like that obviously that's not a very good number for databased uh real estate investment not saying you can't make money in Columbus in Cleveland all right let's move on to real Focus number two and real Focus number two is about median household income people need to earn money to pay rent and preferably you would want them to earn more and more money each year so you can keep raising their rents so between a certain set of years 2000 and 2021 2 and 2021 you want a certain amount of income growth in a certain city you want that income growth to be at inflation levels or close to inflation numbers this is one of those cases where higher is better so 50%

19:21 income growth would be better than 35.8 but you don't really want to consider cities below 35.8% why because their incomes are growing so slowly that your delinquencies are going to keep Rising because what'll happen is people's incomes are growing slowly you're trying to raise rents quickly well they're not going to be able to pay you and they will become delinquent and then you have to deal with eviction so those two years 20221 we're going to show you exactly where to go there's a website called city- dat you're going to go there and look at the numbers this number 35.8% it applies to this year which means next year it may be a different number based on inflation or things like that you can always come and get it from our website we don't have a paid service we don't have a subscription the data is always stored on our

20:06 website so that's number two I'm going to also do number three and then I'm going to show you how to use both of them all right so City real Focus number three is median house or condo value median house or condo value and I I've been playing a lot with this one I actually did a lot of simulations today I went up a little bit to like 59 and then realized it was off and I came back down to 58 so I've actually edited this slide several times today 58% growth is what median what you want to see in hous and condo value right so obviously you want the value of your home to increase you you're a landlord you want that value going up how much is enough well between these two years 2000 and 2021 once again publicly available data you want there to be a 58% increase in home

20:52 price and that's the minimum big higher is better 60% in this case would be better than 50 58 8% and this applies to cities of all s side could be a big city could be a small City it applies to all of them and once again this data only applies for this year do not use this number in 2025 because currently because of inflation home prices are going up so it's going to change next year all right so before I go to real Focus number four I'm going to give you a demo again I'm going to say okay so let's look at real Focus number two and find it somewhere let's go I'm going to go here I'm going to to city- data and once again for the purposes of this exercise I will type in Columbus Ohio my favorite demo cities it's not my

21:38 favorite City to invest in you're actually going to find out what my favorite city is in about 15 minutes but Columbus is a really nice city to invest in the Jewel of the Midwest all right so here I'm going to make text a little bit bigger easier to read there all right so let's go down here so all I'm doing is typing in Columbus Ohio I go to the next page there's a bunch pictures of Columbus I skipped those I scroll down a little bit and here I come across this section you see this section here I'm highlighting it for you right estimated Med median household income in 2021 about 58 Grand people are earning about 58,000 in median household income in Columbus was $37,000 in 2000 so you notice there's a 2021 number and a 2,000 number as you

22:23 can imagine all you're doing is grabbing this number and plugging it in here right so I'm going to go 58202 and then I'm going to grab this number 37897 it was already in there and you notice that the median household income is up about 54% you might say oo 54% right that's a lot higher than my 35.8% yeah you know because that 35.8% is a little bit below the average for the United States and Columbus is going an entire onethird faster so its incomes are growing not at a 2% annualized rent pump increase they're growing really for three three and a half you might even get 4% rent

23:10 growth in my world 4% rent growth is absolutely astonishing so that's a great number and Columbus is doing really really well on real Focus number two let's figure out how it does on real Focus number three the median hous in condo value where's that information same website we had plugged in Columbus Ohio and we were right here right we were on this line well if you look down 2 in you see this and you see two numbers the median home in Columbus is still very inexpensive $219,000 that's cheap that's cheap right 2021 what what was that price in 2000 well it was less than half it was 999,000 so once again I'm going to take that number here I'm going to take this

23:55 number here and I'm going to plug it into the spreadsheet I'm going to scroll a little bit into the right so 9900 already in there and then here I'm going to plug in 29,200 and I'm going to hit enter and wow look at that number 121% that's the that's the price increase over that time frame you're like oh that's not hard there's a lot of places higher than that they are but there's a lot of places that are not would you like me to show you an example let's go look at Cleveland so we're going to go same same state Cleveland Ohio we're going to hit enter and we're going to scroll down and now we're going to pick up that income number for Cleveland right there and we're going to

24:41 say okay so this was 25928 so we're going to go plug this in here 25 928 and then we're going to plug in the higher number which is for this year 35562 you notice that the median household income growth is 37% which is lower so it's below this bound right well almost at that almost at that bound so it's about there so Cleveland's okay but what about this number let's take a look at this number the third one so it's 83,500 so I'm going to plug in 83,500 remember the number for Cle for for Columbus was 121% I'm going to plug in 71 won

25:29 100 and you're going to see you're going to be shocked that when Columbus grew by 120% Cleveland only grew by 177% that my friends is the impact of population because there's so many people leaving there are so many empty units that there's no inflation in home prices 177% is awful awful over 21 years because think about it inflation is two 2 and a half% in the United States in that time frame you should have at least gotten 45 50% home home prices just to keep up in inflation so not only our value is not increases on an inflation adjusted basis Cleveland is losing value your home that you bought for rental is

26:17 earning you cash flow while at the same time its value is going down every year on an inflation adjusted basis do you see the difference it's stunning it's shocking how big that number is that the Gap is and both cities are in the midwest they're both in a state that isn't growing Ohio is not known for its growth by the way but one of them is a growing city and the other one is a city that's not growing this is why databased investing tells you so much so much you could be earning zero cash flow in Columbus if you had held a property for the last 10 years you probably tripled your money because the properties have increased in value so much all right so we've now had three different metrics we've looked at population we've looked at home price growth and we've looked at

27:03 median income let's look at number four and number four is right here and that is whoops next one and that is change in crime levels so when I was looking at this we use a I use a statistical well I used to use a statistical analysis called R now now you can do this on the web in Tableau um an R would basically it allows you to enter two pieces of data or two sets of data and basically say what is the correlation between these two a high correlation is a number close to one so if a correlation is 0.99 you can say these two things are very highly correlated if the number is 0.5 well there's a little bit of a correlation there but they're not really that

27:49 correlated so when I started looking at crime and trying to correlate it with real estate profits right so you get real estate profits from a place like zill by looking at how much home prices increase over time so that creates shows your profit and then what you do is you you're looking at crime in that City there was very low correlation it was maybe like .56 and I wanted something that was .9 .95 very as close to one as I could get after a lot of fiddling what I realized is that uh profits in real estate are not correlated to Crime you can have plenty of profits in high crime cities they're correlated to change in crime if crime goes down in a city over time profits go up and it sort of makes sense

28:35 but it took me a while to figure that out because I was just like wait a minute Memphis is a high crime city therefore you know you can't make money there Oakland is a high clme city and it turns out Oakland Memphis I'm not saying they're good good cities to invest in but they may be F fine as long as their crime stays stable if it goes up that's bad if it comes down well it needs to come down at a certain speed and that's what this number on the screen is below 450 because on that same page that we were there a second ago C- data on that same page there is a crime table let's go look at it I'm going to go back to Columbus by the way so let's go to Columbus

29:21 oops I'm going to scroll and I'm I'm going to keep scrolling for a little while until I see a blue table blue [Music] table there I'm going to make this a little bit bigger because I want to see as many years as possible oops and bigger there now you notice I'm going to make it little bit smaller because I actually want to see more rows there all right so now if you look at the screen it's showing you data all the way to 2020 so unfortunately crime data is a little bit out of of date um and it's showing you data as early as 2007 now one of the coolest things about Columbus this is by the way highly correlated with uh education you might

30:08 say why is one of your numbers not education well firstly you're buying this property for rentals and renters care less lower a lot less about education than than people that are buying these homes to live in them but what you might find is I do have education in my list education is inversely proport with crime as education levels go up crime goes down so I've factored in education through change in crime now I want you to ignore all of the numbers in this table the murders the rapes the robberies the assaults ignore all of those just look at the last line the blue one last one this is a CD data crime index it's very similar to other crime indexes right and so you can see it's got a number and this number you

30:53 want this number to be lower than 450 and you also want it to be smoothly decreasing lower than 450 and smoothly decreasing but not this number cuz that's 2007 you want to look at the the the latest number and you notice Columbus is now lower than 450 so this has been a very sketchy high crime city that has evolved through Education and healthc Care Investments over the last 20 years and it's gone very smoothly from 673 624 591 582 567 513 into the 400s 400s 4 400s 400s 400s and now into the 300s you see how there's a slow but not slow a reasonably quick decline in crime because we went from 7673 to 376

31:40 that's low I mean any City that's below 450 for crime is doing really well but once again it's not the number it's the decline in crime so from the from the left side to the right side of the Blue Line you want to see numbers dropping because if they stay the same even if it's low crime you're not going to get the same benefits for your real estate investment you need to see a decline over time you might say really can cities keep going down yeah there's cities in the US where the number is 200 200 that's right all right so that's number four and you can also plug crime in here real Focus one you so you can basically plug in uh what was the number for Columbus let's take a look again so it was 376 and 673 so I'm going to plug in 376 and

32:29 you're going to notice the cell will say green and this number is 63673 and look at that change look at that crime reduction over 15 years that's huge 297 if this number was even 200 that's a lot of crime reduction that's a lot of not so good people leaving and good people moving in so once again a good City to invest in because it meets the real focuses all right that's real Focus number four and let's finish off with the final real focus and real Focus number five is I'm not going to tell you because before I talk about real Focus number five I want to share one of our projects so this is a project that I've been working very

33:15 hard on and has been working very hard on for a number of years and I want to just share something uh about this project with you so one of the cities that does incredibly well on real focuses shockingly well actually is Idaho Falls it does much better than Columbus by the way um and Idaho Falls is in Idaho which is either the fastest or the second fastest growing uh state in the US depending upon which year you look at and Ido Falls is the only city that I'm aware of in all these years of looking that has won milen institute's city of the Year award three times and it won it three times in just four years there's over 1,000 cities in the United States so you can imagine how hard it is to win one single

34:02 time the idol Falls is the winner for 2024 2022 and 2021 three times1 2023 and 2024 2021 okay I miss 2022 2021 was runner up in 2022 yes uh came in um you know number one again in 2023 and just won again a a few weeks ago so and we and and we based on on our data saw it in late 2022 and bought land there in sorry in 2020 late 20120 and bought land there in late 2020 and started developing once again you can see how our metrics work right so milin didn't rank it uh in the top five until 2021 but we had already purchased our land in

34:48 2020 and you'll actually see that property in pictures in a second so this area is going gang busters just take a look at this neighborhood price appreciation this is three years now real Focus was talking about price appreciation over 20 years of 58% correct well this is three years not 21 years in three years this neighborhood has seen 58% price appreciation I mentioned it for 21 years so amazing and look at that income growth right so 21% in two years these numbers are kind of weird but but Ido Falls is an incredible market right and this is a project that I've been baking for a long time in April of 2022 we're now in March of 2024 um I I wrote the letter of intent and

35:35 then we ended up you know Neil and and me and Anna invested $2.3 million of our money that money has been in there for a while almost a year at this point of time before that we were spending hundreds of thousands of dollars getting it shovel ready so now at this point it's zoned it's permitted it's got City approvals and we're almost at the point where we started horizontal work so this last box is going to be checked off in the next month or so but this is not live you're just watching a preview of this project it's not available for investment so I love this place because the net in migration is stunning their taxes very low their insurance very low their construction costs shockingly low all of those three lead to higher net operating income and I really really love having high net operating income so

36:24 um obviously we've this is not our first Community there as mentioned we we bought land in 2020 by you know built all the way through Co and you can see the com the finished Community um uh this is um 66 units the rents are about $1,700 per unit and it made a lot of money here's a top view of the community you can see a Central Park there's a barbecue area there's a playground here actually this is the barbecue area this is just sort of a fire pit area and then there's a dog park somewhere there parking in the back everyone also has you know as you can see people like to park on their um in this area and some people as you can see park in the back uh everyone has a onecar garage we don't do two car garage these are all town homes and we like building town home

37:09 communities so the new ones also a town home Community here you can see um in Ido Falls uh you know the the local folks will come in and they'll custom build cabinet this isn't lows this is custombuilt Cabinetry here's a close view beautiful granite countertop tops and 9t ceilings you're able to get so much for your money here it's just shocking how much you get for your money large bedrooms look at the the bathrooms once again Granite look at the tiled stuff that's going up it's just amazing how how much you can get um in here so we were it was a very successful project it was very profitable um it's numbers you know looking at it from a syndication perspective equivalent were

37:56 2.6 7x an a of 41% or average annualized return of 41% so we looked at this and said you know let's do it again because the cities doesn't seem to be going anywhere it continues to win Milan's best performing City and most people don't even know where the heck Idaho fa is and nobody knows what milin is and I'd prefer to keep it that way except you know the the group that comes at to us there's 2 million Real Estate Investors if a thousand of you know that no big deal so this is something that will be available for investment we can't give you all of the numbers we're stilling working on them in in a few weeks you'll know they're going to be fantastic these are town homes by the way for rental there are these are some of the pictures of the property once it's built these are renderings sorry of the property it'll look beautiful once it's

38:45 done all right that's that let's go back to real Focus number five and we'll also start talking about cities and real Focus number five is 12month job growth ideally I want you to look for numbers above 2% so you want 2% annualized job growth 1 and a half% for cities that are above Millions like Los angelist hard to get to 2% um so but 2% is great 3% is phenomenal 4% is absolutely incredible right so um this number actually hang on this it this is already done so the this this would have been for the rest of 2023 so actually I'm going to change this to applies to to 2024 because there there was this rush

39:32 you know of employment as as people are coming back from covid and that is now over I'm I'm glad to see that the job numbers have stabilized now this data is on this website Department ofn numbers.com employment metros and you're like I'm not going to remember that link Neil that's okay you're going to get this Excel spreadsheet right I showed you this Excel spreadsheet well the link is in the spreadsheet uh uh right where is it I don't know why it's not in here all right I'm going to put that I'm going to add that in and make sure that the spreadsheet that goes out has the link for you right so Department ofn numbers.com let's go take a look D PT there it is so here's this link now the

40:18 first thing I want to tell you is this this is an ugly looking page but it's very powerful so just ignore the fact that it's not ugly the government doesn't do do a good job of basically posting these kinds of things so first thing I want to tell you is do not look at the monthly numbers the monthly numbers will lead you in the wrong direction One company opens up one company goes under those numbers go up and down it's crazy never look at the monthly numbers you always look at these two numbers the number of jobs added in a year and then the percentage change okay both are important and I'll tell you why so the first thing I want you to do is you see this last one the percentage change I want you to click twice when you're on this page right I know you're not there now but click it once and you will see the cities that

41:04 you don't want to invest in because even though the US is growing robustly we've had a fantastic job growth year for the last 12 months these cities are losing jobs you cannot make money if City you're investing in a money in in in a place that's losing jobs you can make money in a place where it's losing population as long as the population growth uh loss is slow but you cannot make money if jobs are being lost because for every 1% job law you're losing 5 to 15% in rent it's a shockingly large number for just a 1% drop in jobs so click on it once and then click on it a second time now you notice all these cities you see a lot of cities that are above 3% now you see

41:50 some outliers and I'm going to mention some outliers to you and tell you that these are problematic places so Ocean City New Jersey has a lot of transitional jobs which is why often you see it at the top of this list 9% up 9% down but then also some months of the year you see it at minus 9 minus 6 uh so it's it's very transitional that the place itself is Transitional there's some hotels opening up there I would steer clear of this one I would also steer clear of Lawrence Kansas but beyond that point you start seeing some really good numbers so Anna is a super Airbnb super host and she has properties in Charleston South Carolina highly recommended we currently are making an offer on a property in this amazing Corridor that goes from Charleston to

42:36 Myrtle Beach that Corridor and I've been saying this in all of my podcasts if you're listening to my podcast you already know this the corridor between Charleston and Myrtle Beach something interesting is happening there right so sometimes the corridors just do well and it's a two-hour Corridor there's some small cities in the middle but one side's Charleston the other side is Myrtle Beach you can see just how shocking this is for a city as big as Charleston to have a 5.77% job growth number this is rare we don't see numbers for big cities over 5% sometimes we'll see it right around 5% but 5.77% that is a huge huge number now I just wanted to add Neil for Charleston because I was just looking at the 2024 uh milen Institute report it came in as number 11 which is a big deal for

43:23 Charleston huge that is again an amazing right big city side of the world that's big it is it's doing really well and I here's what I'm going to say I think it will be in the top five because if the these are these are recent job numbers and milin sort of looks at a lot of different things yeah so if if it's at 5.77% right now I'm going to say it's going to be in the top five next year top five right amazing Market yes you've got to deal with the insurance issues you've got you know High insurance cost because it's it's on on the shore there uh but other than that an incredible place to invest in now I'm going to skip past manato men uh MN and the reason for that is I've never seen it before in this list so as you can imagine I look at this list you know every month for

44:09 the last 10 years so I become used to kind of knowing which cities turn up again and again but in all the years that Anna's been looking this Anna have you ever I don't never I didn't even know that no idea so I'm just going to skip that right this next city is the most dangerous city in this list highly highly dangerous and you'll often see it at at 5% in fact I'd say probably 23 of the time it's going to be at 5% or even more 6% 7% well that's because Midland Texas is part of the Shale patch so it's it's in the perian basis in Texas and in that area if the price of oil goes up above 80 you start seeing massively massive growth numbers in Midland Texas but if the price of oil price of oil Falls below 72 73 then you

44:55 start seeing negative 5% negative 10% number so this this is an oil town and it goes up and down based on the price of oil so a very very dangerous place to invest in I strongly suggest you stay away uh Selenas California is usually a steady Ed market so we don't see numbers as high as this not sure what's going on there so I I I'm I'm I'm just going to say maybe not a market that you want to look at but Lexington Kentucky we've been talking about Le Lexington and our meetings right Anna comes up again and again as a very interesting meeting now uh a city now I want to point out to you Kentucky is a small state right there's like six people living in Kentucky but and Lexington is the largest city in Kentucky but still a small City well in a small City look at the job gain so

45:41 it's not just the percentage look at this number 12,000 jobs 12 you know 4% is easy if you're it's 2,000 jobs but 4% is hard when it's 12,000 jobs so I just can't I can't say something is going on in Lexington I'm going to say something very big is going on in Lexington for the city to gain 12,000 jobs in a single year that is a big number so obviously you can see other cities gain more jobs but those cities are much larger than Lexington right so a good City to look at if you near Kentucky you might want to take a look at at at at that Trenton always does well usually tends to be around 2% a good City to invest in Durham is better so Durham is uh just about the same number here you can see

46:26 more jobs than than um New Jersey Durham is part of the Metro that we picked this year as the best city in America to invest in which is Raleigh Durham Raleigh Durham Metro right so we we picked Raleigh North Carolina but as you can imagine Raleigh is the bigger city Durham's a smaller city they're about 20 minutes away from each other but Durham is part of that Metro and so you can see the numbers here are incredible you can see Raleigh down here as well so 3.83 these are just shockingly High numbers because Ry is a big city 1.7 million people in the Metro righ's about a million people so when a city that's a million people is 4% um you know job growth amazing that is absolutely stunning and to see that that job growth

47:12 also extends to Durham which is actually doing even a little bit better these are just teller numbers Boise is an incredible City to invest in Boise has been picked by us twice so it's one of the uh rare cities to have been picked twice by us as city of the year but the challenge is at this point boy Boise has extreme a affordability issues because it income have haven't caught up with home price increases so we suggest for the moment you might want to stay away if you listen to us back in 2017 or 2018 when we were talking about Boise and bought there I'm sure um you know what you bought has more than doubled in five years Las Vegas uh this is actually a city that's doing really well at this point of time um I see it in the list a lot as you you know it's a little bit of

47:57 a boom and bust Town um so you might want to keep an eye on the prices and the rent prices but otherwise Las Vegas is doing really really well Fort Collins is better than Denver uh Fort Collins in my mind is better than a few other cities um in um you know um in in Colorado I would say at this point it would be my favorite city in Colorado to invest in um I'm not enamored with Colorado as a state but um but if you live there this is definitely a place to look at um Jacksonville um is in the list very often so it's a it's a perennial growth City the only challenge with Jacksonville is it has a large number of units delivering this year so rents might be negative but if you're in for five years you couldn't go wrong with

48:43 Jacksonville Charlottesville is beginning to show up in our list it's not very consistent but if you live in Virginia a state that has 3.69% in job growth is going to do really well I'll I'll skip it over Cape Coral is absolutely fantastic don't just look at the 3.65 look at how many jobs we're not talking about 2,000 jobs we're not talking about 4,000 jobs Cape Coral has now gained 11,000 jobs in a year just astonishing astonishing City highly recommend that you look at Cape Coral now again you you're going to have to deal with high Insurance I'll skip Jefferson City I'll skip s Lis abiso I don't see them often Huntsville is a terrific City to invest in once again a lot of LLY there so you might see negative rent growth for this

49:28 year but on a 5-year time frame there is no city in Alabama that is as good as Huntsville highly recommended Gainesville is a um it's more of a agricultural town so it's going through an agricultural Renaissance it's about um 112 miles away from Atlanta sort of in the northeastern Direction uh does fairly well um we've we we have and correct me if I'm wrong I think we've made offers on maybe two or three properties on gainville over the last two or three years and we've never won any uh that is correct and I want to say that Gainesville Georgia showed up gang busters in The milen Institute report Neil I was just G Georgia baboom wow wow I you know Anna has read

50:16 this report because she she I just Lally just saw it and and was yeah scouring it before and I just want to say since I just brought this up Raleigh North Carolina number two for Big City number two wow number that's again it's just it's it's astonishing that we basically in a January presentation picked Raleigh as our city of the Year mil always comes out too late for us right so we do our presentation by by milk and Institute I know so it's it's just stunning how the the math really really makes sense that's why data right anyone looking at the data you can't ignore it yeah and and you know uh uh we have a friend of ours Vicki who's listening to us today and and Vicki was there for that

51:01 presentation right so Vicki you know we picked it like two days before right before the milkin Institute came out so very excited when this happens when there's congruence between our data and somebody that has 10 full-time employees just turning away at the data um so I'm just going to go through you're going to notice that I'm going to skip some cities an arbor is a very interesting City high growth but it's also very expensive so there's a second City that I I like to look at which is um uh Grand Rapids Michigan it has a lower growth in terms of um uh of jobs so it's in the twos but it has reasonable prices so so we picked Grand Rapids as our up until coming city of the year for this year we've been looking at it for a while another city that's in this list that I I'm getting used to seeing constantly is

51:48 so Falls in South Dakota so highly recommend that if you live around this area snow falls is doing extremely well now Carson city is part of the Reno area and that area is doing incredibly well I'm not sure if I I'd invest in Carson City I'd probably stick with uh Reno but they're about 10 miles apart from each other uh Dallas is a big city it's perennial favorite usually is in the twos because it's a very large city so it's hard to get into the threes but it's in the threes right now but this the the number one highlight of this list is this one right here pville Arkansas is part of a 500,000 person Metro that includes the cities of Bentonville fville spring Springville or spring Dale and then there's a fourth city I can't remember what it is um

52:35 Rogers Rogers so that Metro which has these four cities is just going gang busters in every different way so in my mind within two years you're going to start seeing it in the milk in top 10 so this is a early identification saying number seven it this in 2024 in the fville bville is number seven beating wow oh my god oh my god wow this is this is thrilling this is incredible I mean we've been we've been making offers and losing offers by the way we had an offer we got a property and then we had to sort of get out of it because you know all bad stuff happened with interest rates so um so we had to to and that property was in Rogers which is the next city over from pville but that Metro is

53:21 incredible I urge you go there buy something because I think they're St for a 5-year run and I'm even more excited to see that it was picked as number number seven City by by milin so check that out Mallen Texas is benefiting from the return of manufacturing no manufacturing is not returning to the United States it is returning to Mexico and Mallen is one of the two way points for goods to come in from Mexico into Texas uh the other one is uh San Antonio which you know there's two freeways one goes to the city of monter in Mexico the other one goes through Mallen into Laro um so that area is uh is booming and it makes sense I think it's going to do really really well for industrial let

54:07 skip some more Miami big city just amazes me I think their home prices are shockingly high but they continue to generate job numbers like this Austin is a perennial favorite um I believe that Austin was milkin city of the Year correct yes number one that's right so um amazing city um not going to do well on Rents It has the largest amount of inventory coming into any city in the United States this year so its rents are going to be negative but you might want to pick something up in Austin at the end of the year because that's probably you'll when you'll see the lower prices cord's doing well Reno's doing well we talked about those um let's see what else in the list is super super exciting or interesting to me I'm just going to keep going until I see a city San Antonio Fantastic look at that 2.6% it's

54:53 a big city 1.5 million people and for it to have this kind of job growth it's doing something right um Bo boom G Columbus but this is a wrong different Columbus Atlanta always doing well five million people and to be doing 2 and a half% of job growth at 5 million is phenomenal uh Indianapolis I we've been talking about Indie more and more we also gave Indie our upcoming city of the Year award in 2022 uh just phenomenal in Indie just seems to be doing everything right this is a city that we invest in one of our favorite properties is in this city Dalton Georgia the carpet capital of the world uh doing quite well with job growth at 2.37% and let's

55:39 see Grand Forks Orlando Orlando yeah doing well 2.25% 1.7 million population for the Orlando metro and for you know an area well actually sorry I've got that wrong 1.7 is Raleigh 2.7 million people live in Orlando Florida and for a city of that size look at that 32,000 jobs that's a lot of jobs in a year 2.25 this they're doing something right uh we also mention often for people that live in Washington the best place to invest in Washington is kabic Washington in the Tri Cities area small place but really awesome it's been on our list for a very long time and now that I'm getting into the twos I'm less excited about some of these places um and so we'll we'll stop

56:27 here if you have questions about other cities feel free to ask us we'll we'll answer them as quickly as we can but that's our presentation remember five things one Excel spreadsheet once you do this people tell us it takes them 10 minutes and they so they randomly pick two cities in the US repeat the five steps takes about 10 minutes and they the the insights that they get are just absolutely mindblowing mindblowing right we picked Provo in 2017 and 2018 milin picked it as well twice milin Provo has won uh twice no longer sort of as Ultra hot as as some of these other places are um you know because the home prices have gone up a lot so um that's our presentation and um feel free to ask us questions about your cities awesome Neil

57:15 well let's start with some questions um any rules or systems to finding good neighborhoods within the cities yes and um I believe that our president the I believe that the course that we have up on udemy.com so just type in udem space real Neil B it actually gets into the neighborhoods so it it goes further you know we we want to do a 45 minute webinar we were already at six o'clock so we've already been at it for an hour but it gets into the neighborhood so you can go and and watch the course it's free did you consider cities and towns were major universities are located in your analysis the answer is I don't need to because it's shows up in the job data it shows up in the income data so it shows up by by default it's it's you know

58:03 fairly common for those to do well for example on the screen you see College Station College Station is a major college town it is roughly 75 80 minutes from Austin um maybe a little more maybe 90 minutes from Austin uh and you'll see a number of them showing up State College shows up College Station shows up actually when we were up there so Falls itself is a is it town with colleges so they they do fairly well it's just I don't need to specifically Target them from the student housing perspective um the population data is way outdated on Google where do you where do you suggest to get more updated data from so uh there's there's a bunch of services that basically um you can pay for so you can pay for local market

58:48 monitor that's local market monitor you can also pay for housing alerts that's housing alerts these two Services would give you more updated data I think you're going to end up with the same list of cities uh so if I'm looking to invest in a suburb do I apply these metrics to that specific Suburban City or apply them to the nearby surrounding MSA Metro you apply the rules to whatever is the largest city in a Metro um and based on that you can invest in a suburb um as I mentioned uh a little bit earlier there's there's you know you can also figure out how well neighborhoods work or you can look at a website called neighborhoodscout.com highly recommend it neighborhoodscout.com to look at the Suburban neighborhood and make sure that

59:35 that Suburban neighborhood looks just as good as the city itself does gentrification and being out poll we got we got to throw up the poll Anna can you throw up the please throw up the poll yes are you throwing that up while I take question no actually hang on let me let me go in here it's not showing it for me can you can you all right I will find it okay there we go thank you all right um please please um take a look at the questions on the poll and answer us they help us a lot uh in the meantime we'll take the next question does gentrification and being out priced change reduced crime rate uh gentrification does reduce crime

1:00:23 rates I hate saying that because I feel gentrification is primarily a negative thing it forces people out but speaking speaking just from a statistical perspective gentrification reduces crime rates yeah how do you look up what typical construction costs are for different areas great question there's no there's no easy way to look that information up um you know a lot of times we call local Builders local Brokers local civil engineers and they have sense of it but you have to have a standardized product like you can't call somebody and say what is the construction cost in your area they they won't give you a straight answer so you might say something like what is the construction cost in your market for a

1:01:09 three-bedroom starter home or a two-bedroom town home or a three-story apartment then you might get slightly better answers uh but there's no as far as I know there's no database in the US paid or free that provides that information where is a good area for Self Storage um so self storage is not correlated to population Self Storage is actually investment is correlated to how many units there are per capita in a a particular market so I would highly recommend that you do not use our data for Self Storage like for example we we have a cell we we've done two Self Storage projects one in Utah a smaller

1:01:55 one and then a much larger one in um in Memphis Memphis is not a growth town in any way a Memphis is there's four cities in that we look at uh Chattanooga uh Knoxville Nashville and Memphis of them Memphis is clearly the worst but we did the Self Storage there because we're aware that Self Storage is really about how many units do you have in a certain neighborhood versus how many people live there and that metric is available for through a variety of websites you know yardi Matrix provides data so there's paid data you have to buy it you absolutely do not want to basically say hey this area has great population I'm going to go out and do Self Storage there that's a very bad way of of looking at self doing uh we're going to get to the cities lots of people asking about

1:02:40 cities but I'm going to ask a few non- City questions first uh many five and 10 year lower interest rate mortgages are coming up for Renewal and probably happening as we speak so that those would be commercial loans what effect does this have on the market who had lowest interest rates for this period and now are forced to refinance to more than double their interest rates are they just selling out and getting out of home ownership leaving inventory for investors like us well I the honest I mean Anna Anna he's asking the question from the home owners perspective because he said home ownership right yeah okay so yeah also he said five and 10 which sort of doesn't make sense because most people actually are are doing 30-year fix so when we are looking at the invent that that is due

1:03:27 to come into the market for single family in the next two years it's actually very weak it's it's weak inventory because so many people refinanced if in 2020 2021 and 2022 such a large percentage of people refinance even people that are refinanced before refinance including myself right so I went from 3.25 to 1.75 that there isn't a huge amount of inventory that's expected to come on in the next two years obviously the effect of you know covid Ultra rates wains so it goes down every year but we actually don't expect a balanced market for single family until 2026 or 20127 um okay for your usual quick City

1:04:12 question all right so here we go with with qu City questions you ready yeah here we go Charlotte North Carolina fantastic City to invest in it's only second to Raleigh sort of in our list in in that area so when we look at sort of the you know the the the southeast of the United States an incredible City to invest in it's actually larger than um than Raley it's a bigger city um terrific City to invest in obviously prices are a little bit on the higher side um but um overall yeah really really good Houston Texas um so Houston's a good City to invest in but it's it's I always tell people it's there's two sides to Houston they don't have any Z owning laws so often Houston overb builds and it's

1:04:58 currently overbuilding so that the there's 9,000 units scheduled for delivery in Houston this year that number is not the largest in the US Dallas has you know 177,000 units but uh Dallas also absorbs more because it

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