How to Pick the Right Market (Even If You're Not Local)

Here's a secret that surprises most new investors: some of the wealthiest real estate investors I know have never set foot in the cities where they own property.

That statement probably goes against everything you've heard about real estate investing. "Buy where you know," they say. "Invest in your backyard," the gurus preach. But what if your backyard is San Francisco, New York, or Seattle, where a decent rental property costs a million dollars and cash flows like a leaky faucet?

The truth is, in today's connected world, geographic proximity is overrated. What matters is picking the right market with the right fundamentals—and then building the right team to manage it from afar. I've been investing remotely for over a decade, and my out-of-state properties have consistently outperformed anything I could have bought locally.

Let me show you exactly how to identify high-potential markets, even if you've never visited them.

The Fatal Flaw in "Invest Where You Live"

The conventional wisdom of investing in your local market made sense in 1985. Back then, you needed to physically drive properties, meet with contractors, and manage tenants face-to-face. Information was scarce and local knowledge was power.

But we're not in 1985 anymore. Today, you can video tour a property from your couch, wire funds electronically, and communicate with your property manager via text. Meanwhile, your "local" market might be completely wrong for your investment goals.

I live in a high-cost coastal market. If I had followed traditional advice and only invested locally, I would either own zero properties (because I couldn't afford entry prices) or I'd own expensive properties with minimal cash flow, banking entirely on appreciation—a speculation strategy, not an investment strategy.

Instead, I invested in three Midwest markets I'd never visited. Those properties have delivered 12-15% cash-on-cash returns while my friends who bought locally are still waiting to break even each month.

The question isn't whether you can invest remotely. The question is: how do you pick the right market when you're not there?

The 7 Data Points That Reveal High-Potential Markets

Forget gut feelings and hot tips. Market selection is a numbers game, and the numbers don't lie. Here are the seven critical metrics I analyze before I even consider a market:

1. Population Growth and Migration Patterns

Growing populations create rental demand. It's that simple. I look for markets with consistent population growth over the past 5-10 years and positive net migration (more people moving in than out).

Where to find this data: U.S. Census Bureau, city-data.com, and state economic development websites publish this information freely. Look for annual growth rates of 1-2% or higher.

Red flag: Declining or stagnant populations. Even if properties are cheap, there's usually a reason people are leaving.

2. Economic Diversity and Employment Growth

A market dependent on a single employer or industry is a ticking time bomb. Remember Detroit when the auto industry collapsed? I look for markets with diverse economic bases and growing employment sectors.

What to look for: Multiple industries, presence of healthcare and education (recession-resistant), growing tech or professional services sectors, and unemployment rates below the national average.

Power move: Check which companies are relocating to or expanding in the area. When a major employer announces a new facility, savvy investors are already buying before the news becomes common knowledge.

3. The Rent-to-Price Ratio

This is your quick litmus test for cash flow potential. Divide the average annual rent by the average purchase price. The result tells you immediately if a market can deliver positive cash flow.

The benchmark: I look for markets with a 1% monthly rent-to-price ratio or higher. So if properties average $150,000, I want to see rents of at least $1,500/month. Markets below 0.7% are typically cash flow negative.

Why this matters: This single metric eliminates 60% of U.S. markets from consideration. Expensive coastal markets almost never hit this threshold, while many Midwest and Southern markets exceed it comfortably.

4. Days on Market and Inventory Levels

This reveals market liquidity—how easy it is to buy and sell. Too hot and you'll overpay in bidding wars. Too cold and you can't exit when needed.

Sweet spot: 30-60 days on market with 3-6 months of inventory. This indicates a balanced market where buyers have negotiating power but properties still move.

Warning signs: Days on market exceeding 90 days suggests weak demand. Under 15 days means you're buying into a frenzy where fundamentals get ignored.

5. Property Tax Rates and Landlord-Friendly Laws

High taxes kill cash flow. Tenant-friendly regulations can make management a nightmare. These factors dramatically impact your actual returns.

Do this research: Compare effective property tax rates (many states have different rates for different property types). Review state landlord-tenant laws—how long does eviction take? Are there rent control laws? What are the security deposit limits?

Pro tip: Some states are dramatically more landlord-friendly than others. Indiana, Texas, Georgia, and Arizona tend to be investor-friendly. California, New York, and New Jersey tend to favor tenants heavily.

6. Price Appreciation Trends (But Not What You Think)

I don't chase appreciation—it's unpredictable. But I do look at historical trends to understand market stability. I want markets with steady, moderate appreciation (3-5% annually) rather than boom-bust cycles.

The insight: Consistent moderate growth indicates genuine economic health. Explosive growth often signals a bubble. Flat or declining values signal fundamental problems.

7. Crime Statistics and School Ratings

These might seem like "soft" metrics, but they directly impact tenant quality, vacancy rates, and property values. I won't invest in high-crime areas regardless of the price.

The research: Check NeighborhoodScout.com for crime data and GreatSchools.org for school ratings. I target areas with crime rates below the national average and schools rated 5 or higher (out of 10).

Counter-intuitive truth: You don't need the best schools if you're targeting working professionals without children. But you do need safe neighborhoods.

The Markets Nobody Talks About (And Why They're Goldmines)

Everyone knows about Austin, Nashville, and Charlotte. These "hot" markets get all the press—and all the competition. By the time you read about a market in Forbes, you're already late to the party.

The markets that deliver the best risk-adjusted returns are the ones flying under the radar. These are mid-sized cities with solid fundamentals but no hype. Think Indianapolis, Columbus, Memphis, Kansas City, or Cincinnati.

These markets offer:

• Purchase prices 50-70% below coastal markets

• Rent-to-price ratios that actually produce cash flow

• Less competition from institutional investors

• Stable, predictable appreciation

• Strong manufacturing, healthcare, or education anchors

I've personally invested in two markets that had never appeared in a single "best markets" article. My research showed all seven metrics were strong, but they lacked the sexy story that attracts crowds. Five years later, those properties have appreciated 40% while delivering positive cash flow from month one.

The Virtual Market Research Process (Step-by-Step)

Here's exactly how I evaluate a new market without ever visiting:

Phase 1: Macro Screening (1 hour per market)

• Pull population, employment, and economic data

• Calculate average rent-to-price ratios

• Review state landlord-tenant laws

• Eliminate markets that don't meet thresholds

Phase 2: Deep Dive (3-5 hours per market)

• Analyze specific neighborhoods using crime and school data

• Join local real estate investor Facebook groups and lurk

• Read local news sources to understand issues and opportunities

• Call 3-5 property management companies and ask about market conditions

• Review rental listings to verify actual rents and demand

Phase 3: Boots on the Ground (without your boots)

• Hire a local real estate agent who works with investors

• Have them video tour neighborhoods and properties

• Schedule calls with local investors (BiggerPockets is great for this)

• Talk to local lenders about market conditions

• Request market reports from property managers

Phase 4: Test the Waters

• Make an offer on a property that meets your criteria

• If accepted, proceed with inspection and due diligence

• If rejected, adjust strategy and keep learning

The entire process from initial screening to making an offer can take 2-4 weeks of part-time research. That might seem like a lot, but you're making a decision that will impact your finances for years or decades.

Building Your Remote Dream Team

Here's what most guides won't tell you: picking the right market is only half the battle. Success in remote investing depends entirely on your team.

Your core team needs four members:

1. An Investor-Savvy Real Estate Agent This isn't a typical buyer's agent. You need someone who understands investment properties, can analyze deals, knows which neighborhoods produce good tenants, and won't waste your time with properties that don't meet your criteria. Interview at least three agents and ask for references from other investors.

2. A Property Management Company This is your most critical hire. A good PM company is worth 10% of rents. A bad one will cost you far more. Look for companies managing at least 100 doors, with established systems, and responsive communication. Read reviews obsessively and call their current clients.

3. A Local Lender or Mortgage Broker Local lenders understand the market and can often offer more flexible terms than national banks. They're also faster and more reliable for closing deals in competitive markets.

4. An Insurance Agent Specializing in Investment Properties Landlord insurance is different from homeowner's insurance. You need an agent who understands investment property coverage, including loss of rents and liability protection.

The beautiful irony? Once you have this team in place, being remote becomes an advantage. You're running your investment like a business with professional operators, rather than getting emotionally involved or trying to do everything yourself.

The Question That Changes Everything

Before we wrap up, let me share the single most important question that transformed my investing approach:

"Where do I want to be in 10 years, and which market will best help me get there?"

Not: "Which market is hottest right now?" Not: "Where can I buy the cheapest property?" Not: "Where do my friends invest?"

Your market selection should align with your specific goals. If you need cash flow today, target markets with high rent-to-price ratios. If you're building long-term wealth and can sacrifice cash flow for appreciation, different markets make sense. If you want to scale to 20+ properties, you need markets with inventory depth.

I've seen investors succeed in dozens of different markets because they chose markets aligned with their strategies. I've also seen investors fail in "great" markets because those markets didn't match what they actually needed.

Your Action Plan

You don't need to visit a market to invest there successfully, but you do need a systematic approach. Here's your action plan:

1. Define your investment criteria (cash flow targets, appreciation expectations, risk tolerance)

2. Screen 10-15 markets using the seven metrics above

3. Deep dive into your top 3 markets using the research process

4. Build relationships with potential team members before you buy

5. Start small with one property to test your systems

6. Refine and scale based on what you learn

The investors who hesitate to invest remotely often stay stuck in expensive local markets, watching opportunities pass by. The investors who embrace remote investing with proper research and team-building unlock markets where the numbers actually work.

Your perfect market is out there. It might be two states away or across the country. But armed with data, a solid process, and the right team, distance is no longer a barrier—it's an opportunity.

The question is: are you ready to expand beyond your backyard?