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Jim Cramer, the crazy stock guru over at Mad Money, loves to talk about his stock thesis--his analysis of why he favors a certain sector in the market. Well in real estate, you’ve got to have a thesis too. Your thesis is your plan of attack and strategy. This thesis could steer you towards buying property near college towns to take advantage of the locked in demand of a growing university. Or, another thesis could be buying property based upon a comsumer store or chain that’s moving into the area.
Newsweek as an interesting article on real estate investors who base their property purchases upon where and when new Starbucks and Home Depot stores are moving into the area, since both these companies do a large amount of market research before opening a new store.
And even though these two companies are suffering right now, and closing some stores, the whole market is suffering, but long term this thesis might make you money. Use this as an additional factor in whether or not you buy a piece of property or buy in a certain area. Sort of something you can check off - how far is the local Starbucks or Home Depot?
Adam Epstein of Site Analytics, a New York-based firm that helps chains analyze data to choose new locations, says he does sometimes observe a "snowball effect," in which the creation of a subdivision gives a particular retailer the confidence to site a store nearby, which in turn boosts demand for houses, which draws in more retailers, etc. Epstein also says that as some retailers (including Starbucks) have begun promoting future locations on their Web sites, more real estate investors seem to be making use of the data. "Among homebuyers, [Starbucks] is seen as the ultimate validation," Epstein says.
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I think this is a great idea, and anything like this is helpful, whether you use this as a thesis or not, it gets you thinking. Perhaps there’s a regional chain that might make more sense in your local area to follow, or is there some other factor that you can add into your analysis - schools, stores, parks, public transportation, and so on.
The good thing about this thesis, is that your letting these companies do some of the leg work for you. They're doing the market research and weighing whether or not they can open a store in your area.
Other Real Estate Thesis Ideas
- Buy apartments near universities
- Buy duplexes and live in one unit
- Buying distressed properties – foreclosures and REOs
- Buy and flip fixer uppers
- Buy historical landmarks – or properties with the potential to become historical landmarks
- Bringing partners together to buy property, whether residential or commercial
- Buying commercial property if you have one particular franchise on board
- Salvage homes (the basic structure of the property) and move them to a new location
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