Each new investment in single-family rentals should be grounded in selecting the right market. In real estate investing, this can be relatively difficult due to the complexity of the market, the unavailability of data, and the large number of variables. Thankfully, platforms like HouseCanary’s CanaryAI and Market Insights simplify the identification and comparison of markets, making this task much easier for investors.
In this guide, we'll walk you through a step-by-step process to identify, evaluate, and compare the best markets for your next investment property using data analytics powered by HouseCanary.
Before researching markets, it’s essential to define your rental investment strategy. What kind of property are you looking for? What yield or appreciation in property prices do you require? Once this framework is set, you can start looking for markets that align with your investment goals.
One of the biggest challenges investors face is a lack of reliable and comprehensive data to evaluate new markets. Investors often have to piece together information from multiple sources—public records, MLS data, and other fragmented datasets—which leads to incomplete insights about market dynamics and ultimately suboptimal decisions.
One of the biggest hurdles investors face is the lack of reliable and comprehensive data. Often, you’ll need to pull information from various sources like public records or MLS data, which can lead to incomplete insights and less-than-optimal decisions.
CanaryAI is a powerful tool for starting your market research. Instead of visiting multiple platforms, you can ask CanaryAI direct questions to quickly form an opinion of the markets. Here are a few examples:
These questions offer a bird’s-eye view of potential markets, giving you an edge in aligning your investment strategy with optimal markets.
Once you have shortlisted a few markets, the next step is to analyze the conditions within each market more deeply. Key metrics to consider include supply versus demand, rental rates, home pricing, and economic indicators such as employment growth.
HouseCanary’s Market Insights provides deeper, ZIP-level data analytics across over 20,000 ZIP codes and 185 MSAs. It offers more than 100 key metrics, enabling you to:
For example, you might use Market Insights to compare Phoenix neighborhoods, such as 85006 and 85008, and determine which has better long-term investment potential.
After evaluating individual markets, the final step is to compare them against each other to see which offers the best opportunities. This involves not only comparing current metrics but also forecasting future trends and understanding market-specific subtleties.
To compare Phoenix and Dallas for real estate investments, you could use HouseCanary tools to assess the following:
These insights allow you to make data-driven decisions rather than relying on assumptions.
Once you've identified the best markets, it’s time to zero in on individual properties within those markets. HouseCanary’s Acquisition Explorer and Property Explorer tools can assist with this stage.
Acquisition Explorer helps investors swiftly source on- and off-market opportunities. You can set “Buy Boxes” to filter and be alerted to properties that meet your investment criteria. Detailed MLS listings and proprietary data further streamline the process of finding properties that fit your portfolio.
Once your target market is defined, Property Explorer our offers a dynamic desktop valuation report and comp selection tool for evaluating and comparing properties. It mines a database of over 110 million properties, combining public records and MLS data to provide a comprehensive profile of each property.
With this tool, you can compare properties, estimate post-repair value, and get insights into rental income potential. Property Explorer also helps assess neighborhood trends and risks.
In today's competitive real estate investment landscape, access to the right data is critical. Tools like HouseCanary's CanaryAI and Market Insights provide investors with comprehensive views of potential markets, ensuring confident, data-driven decisions. Identify, evaluate, and compare markets effectively, empowering your next steps in building a profitable rental investment strategy.
Whether you're exploring markets like Phoenix or Dallas, HouseCanary's tools give you the insights needed to ensure no investment opportunity is missed.