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Which Geographical Markets are Best for Real Estate Investment?

By: Mitch Paskover, Managing Partner
Which Geographical Markets are Best - feature image

Location Criteria

We’ve all heard the saying “Location, Location, Location” when it comes to what matters in real estate.

For some investors this can apply to areas as broad as a region of the country (Midwest, West, Southeast, Northeast, etc.), certain states or cities, or even specific submarkets or neighborhoods.

But how do investors set their geographical criteria?

For some, they like a particular market because they know it well—they either live there or visit it frequently and understand the dynamics at play. Others seek out markets that have similar socioeconomic drivers and stick with them.

Strategic Options

Some may prefer to invest in markets with milder weather to minimize certain risks, and still others look strategically at different geographical regions to see where they can get the highest return on their investment.

There has been a big push toward urban centers over the past several years, which is where real estate has been the hottest and prices have risen dramatically due to increased demand—think the six primary markets, which are defined as having more than 5 million residents: New York City, San Francisco, Washington D.C, Chicago, Los Angeles, and Boston.

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Secondary Markets

That said, as primary markets became oversaturated with would-be buyers and returns on real estate investments have diminished in certain submarkets, investors have looked more toward secondary markets, which house between 2 million and 5 million people, for better yield.

Some secondary markets that investors are watching include Austin; Charlotte, NC; Denver; Charleston, SC; Nashville; Portland, OR; and Raleigh, NC.

As the secondary markets have grown in popularity, investors have continued their search for yield in tertiary markets, which contain less than 2 million people, such as Lexington, KY; Philadelphia; and Albuquerque.

The trick for many investors is finding deals in markets where their properties will continue to grow in value, due to factors including rising job and population growth and high quality-of-life scores, so educating yourself with market data and understanding the real estate cycles in specific markets are essential before making a geographical investment choice.

Mitch Paskover, Managing Partner
Posted By Mitch Paskover, Managing Partner

Mitch is a seasoned real estate investment professional with almost 20 years of hands-on experience bringing strategic planning, financial experience and vision to the Trion team.

He is co-founder of Trion Properties and oversees all aspects of debt and equity placement and asset management for the company. Since its inception in 2005, Trion has generated an average internal rate of return in excess of 30%. The company acquires opportunistic real estate investments that need moderate to heavy rehab on a mid to long term investment horizon.