Transcript
[music] Welcome everyone. The name of this course is how to find the hottest real estate markets using data science. So far about 20,000 investors have taken this course in some form or the other. And I get dozens of fan mails about this course from all across the country. Billions in real estate have been purchased using the techniques that you're going to be shown in this in this courseinars.
and tens of millions of profit have been made all using the simple and free techniques that you're going to learn today. So, a little bit about me. I'm a quirky, opinionated data scientist who builds and buys real estate throughout the US. Over 1,300 fairly datadriven investors have been kind enough to give our team 330 million in equity. So my team and I can use our data science techniques to exploit blind spots in the US real estate market and we've used their money to buy or build a portfolio of 25 plus projects which have nearly a billion dollars in as completed value.
So our data science journey has taken us to 17 metros across the US across 10 states all handpicked using the same principles that you're going to see in today's webinar. And many of our properties have been in unknown cities with names like Lethonia, Dalton, Fagatville, Greenville, right? And they've been blockbuster successes. Why? Data science.
Yes. The number one job in America that every billiond dollar company is hiring for for can also create astonishing returns and astonishing amount of wealth in real estate. And sometimes I just don't find anything to buy in the cities that I'm going to show you today. and then I build them. So, multif family projects, you know, build to rent projects, industrial projects, town homes, you name it, we've built it.
And we've had some pretty amazing success. You know, our last last four projects had an average annualized IRRa of 49.8%. If you don't know what IRRa is, you can just basically say annualized return of 49.8%. And these are actual investor returns. And remember, I don't cherry pick.
I'm just showing you the last four sold. So, thousands of hours have gone into buying and improving and selling these projects. And the biggest reason for this kind of success is data science. And keep in mind, you know, the market's been pretty bad for the last couple of years. So, we do actually expect this number to come down, this 49.8% to come down.
So, things have changed for us, but they've also changed for everyone else in the market. Our goal is not to suggest that we will have returns like this in the next five years. won't, but I think we can stay ahead of others using data science. And our, you know, geeky investors adore our data science. For example, Sarah has invested with us four times.
We've now sold two of the projects. Just read the sections in orange. All right, before we get to the amazing data science content, here's the really boring stuff that my lawyer forces upon you. This is an educational webinar. doesn't squeeze out the risk in real estate investing.
My recommendations are not magic. You know, they're personal opinions. So, do your due diligence. You know, consult professionals and understand that even if you do all of those things, you could still lose money. The bottom line, real estate, stocks, these are all risk investments.
Oh, and and feel free to type in your questions or ask me about your favorite cities. I am going to discuss your favorite cities at the end. And we'll be also sending out a recording of this event, though probably not tomorrow. It's a Friday. probably on Monday.
So, I like Yeah, I many of you that have attended my webinars know that I like throwing out this slide, right? Because this slide is is is so so shocking that every time I look at it, I'm amazed, right? It used to be used to be only a few dozen decad only a few decades ago that twothirds of Americans lived in their own own home and onethird of Americans lived in a rental property. But take a look at these astonishingly high prices and mortgage prices and and you know a lockin effect. We're now seeing middle-ass Americans become forever renters.
You could, as you can see from this graph, buyers must now earn roughly $114,6275 grand to afford a typical home in the United States. And a typical buyer, as you can see, only makes $75,000 as of as of 2022. I think these numbers as of 2025 have gone up, but both of them have gone up. That 115's gone up to about 117 and the 75,000 has gone up to about 78,000. So this gap of about $35,000 is almost impossible to bridge in the next 5 years, 10 years, 15 years, right?
Remember that that the 115k number that I just gave you is for the entire US, right? And there's places like San Francisco where you need an income of nearly $300,000 to buy the median home. And as a result, right, the cost to buy a home is the the the income needed to buy a home is just skyrocketing. Take a look on the right side, San Francisco, you need a $44,000 income to buy a home. That's just an absurd number, right?
In Phoenix, which used to be an inexpensive market, it's 121,000. The US average, as I mentioned, was 115 and the median income is 75,000. So obviously the real estate market is broken. It's broken for home ownership which is which makes me feel very sad as a as a as an immigrant and somebody that you know loves the home ownership model of the US. It makes me sad but it also as an investor excites me because we haven't managed to fix this in any way at all any shape at all in the last two or three decades.
In fact the worst 5 years have been the last 5 years. This essentially means that America is becoming renter nation which is not unusual. Canada is a renter nation. Europe is you know you can you know has a high rate of rentals and the US at this point is also going in that direction where the vast majority of people that are becoming adults today are going to be renters. So knowing that the big question that people should be asking is right what how should I in make an investment into rentals?
Well you can invest in single family you can invest in multif family but the big question is where do I go? It's a big, you know, big country. There's 396 metros. There's over a thousand cities. Where do I go?
Obviously, you can buy, you know, something one city over. And for those of you that are here that want to do that, that's still a profitable strategy, but a lot less profitable than what I'm about to show you. So, what I'm going to show you is another option where you pick a city not based on its proximity to to where you live, but you pick it based on data and demographics. I'm going to show you five different key metrics that you're going to use. I call them real focuses.
On the screen is real focus number one, which is population growth. And my algorithms, and I I calculated this every year, I actually did this last week where I updated this this deck for 2026 is that if the city that you're looking at, maybe maybe you have a water cooler discussion with somebody and somebody's saying, "Well, I think Merced, California is a great city." and somebody else says, "No, no, no. It's Rogers, Arkansas." And you're like, "Okay, I don't know anything about Merced, California or Rogers, Arkansas. How do I compare these two cities, you know, and any random list of cities, how do I compare them? Where where does it make sense for me to buy a rental property?
Whether it's a single family or large multif family, it doesn't really matter, right? So, I have spent a decade and a half and and again, my background is in data science. I have a computer science degree. I've spent a decade and a half asking that question and trying to figure out the simplest, easiest way to rank cities, right? And I was obsessed with the idea that this ranking has to be free.
It can't just be something where I say, "Okay, well, go and buy these five softwares and use these software." It had to be that it had to be free. And from time to time, my sources change because whatever source I had no longer work, so I have to keep switching them. And so using completely free sources, I'm going to show you today in a demo, right? You're going to see it in a moment. you're going to see me throwing a browser up.
What you need to do is that the cities that you're investing in, if the if the city itself has between 250,000 and 1 million people living in it, right? And that's sort of the bulk of cities in the US, then you want a certain amount of population growth between two two years. So think of goalposts, right? So the one goalpost is 2015, the second one is 2024. That's a 10-year time frame.
So in that 10-year time frame, you want the city to have grown by 10.1% in population growth. Now you might say that seems like an arbitrary number. No, I calculate the these numbers and I want each of these metrics to be at the point where that a certain amount of growth leads to a lot of profit, right? Where is that jumping off point? Where is that hockey stick?
because you're going to see slow profit, slow profit, and then all of a sudden it curves upwards. I've always tried to calculate that for these five different metrics. Well, for population growth, it's 10.1% over the last 10 years. Now, this doesn't apply to every single city in the US because larger cities grow slowly. It's it's only normal that a big city like Los Angeles is not going to grow as quickly as a small city like Fagatville, Arkansas.
So, on the screen, I'm giving you the number for large cities if you want to invest in large cities. I don't think you should invest in large cities, but if you want to, you're comfortable, look for 6% growth. It's not easy to find, by the way. What about micro cities? What about cities where the total population of the city or metro is under 250,000 people, right?
Those are very small cities and they're significantly riskier. So, you should have a higher number if you're taking that risk. And I'm suggesting that you should take that risk, but you're looking now for a number of 13.5% before you invest in a smaller city. Higher risk, higher return. So, you should look for a city that grows faster.
Small cities often grow faster. I've even seen growth numbers over 10 years of 30 or even 40% in smaller cities. They can't be sustained, but they're there. Right now, the first thing I want to tell you is this 10.1% number. Take a look at the screen.
It only applies to 2026. And obviously because you're coming in in November, it applies for the last couple of months for 2025 as well. But it basically applies for 2026 and it does not apply for 2027. And I'll show you how to get new numbers for 2027. Remember, we don't charge for this course.
There's no charge. There's no subscription. Everyone gets access to this and and everyone will always get access to it. All right. Now, the next question is, okay, fine.
Where do I get this data? Well, we're going to get this particular data, right, for any city that you want to to to take a look at from Fred, which is the Federal Reserve Bank of St. Louis. And there's a link right here, which you do not have to screenshot because I at the end of this webinar, you're going to be sent this deck, you know, that you're watching. And you're going to see an Excel spreadsheet.
And inside the Excel spreadsheet, this link's already there, right? So, you don't have to worry about it. You don't have to write anything down. Just just watch. So, here's this link, right?
You're going to go to this link. You're going to find your metro, whatever metro you're interested in. And then using your mouse, you're going to go to a graph. I'm going to show it to you a demo in a minute. And then you're going to compare the 2024 number, the population, and then you're going to go backwards to 2015.
You're going to compare that number. You're going to write both numbers down, and you're going to plug it into the spreadsheet. And where's the spreadsheet? I'm going to drag it onto the screen in a few few minutes. So, you're going to see the spreadsheet, and you're going to have access to that spreadsheet.
that's what you're using until next year when this whole thing is going to be done using a custom chat GBT through AI. But for now, old school spreadsheet. All right. Now, before I show you the demo, I want to go through a couple more of these real focuses and then I'll basically launch the demo. So, let me let me get a little bit further.
Remember, I'm going to show you five metrics and next year I'm going to show you six because I I've now finally found a way to add supply in. So, I'm going to go to real focus number two. When real focus number two says that the median household income of the city that you're considering investing in for single family, multif family, it should have a 52.7% income growth between 2000 and 2023. I know that's a long range and you're like by 2023 I'm I'm watching this at the end of 2025. Well, that's because you're using public data.
Now, if you're if you want to purchase data, there's many different places that provide this data. neighborhoodscout.com. But all of these sources cost $1,000 a year or more. I wanted to give you public data. And what's fascinating, what's fascinating is I use a software.
It's called R. It's a statistical analysis software. And the software tells me that even though I'm only getting 2023 data, even if I got 2024 data, we're in 2025, so you're not going to get 2025 data until next year. So even if I got 2024 data instead of 2023, I end up with the same list of cities. Why?
Because the progress of cities, their upward or downward movement doesn't usually go change over a year or even a decade. So it actually takes a long time for cities to move upwards and a long time for them to move downwards. Right? There's this feeling that people have which is just emotional that oh well Amazon did this or you know or or Nvidia did that and because of that cities went up and down. There's no real evidence that that's this actually happens.
It takes a long time for cities to move upwards. It takes a long time for them to move down. Think of cities as very large oil tankers. Right? When you're trying to turn an oil tanker, it takes about a half an hour for them to just start the turn, right?
That's cities. So, the fact that the data on this slide is only up to 2023 and not 2024 data is not very relevant to you ranking the cities. You're going to end up with the same list. All right. The website that you're going to use to get this information, I'm going to show you a demo in a minute, is citydata.com.
You're going to search for a city on the homepage. Then, you're going to scroll to the median household income section. And then, you're going to compare the 20 and 2022 numbers. Demo coming up. You're going to add it to your spreadsheet and it's going to give you an answer of thumbs up or thumbs down.
Once again, this number that I gave you, 52.7%, it only applies to 2026 and the remainder of 2025. So, don't apply it in 2027. Real focus number three, median house and condo value. So the city that you're looking to invest in, look for a minimum of 92% growth in median house and condo value between 2000 and 2023. Now this is the easiest of the five real focuses to hit.
So you might say, why don't I pick a higher number? You're welcome to. You you can pick a higher number than 92%. You can even pick 192%. And there's a few cities in in America that qualify for that as well.
But it it's important to understand that the purpose of these metrics is to give you a cutoff. Any city above that is fine. And sometimes depending upon the the metric, the cutoff is easier and sometimes a cutoff is harder. And that is by design. So here once again, we're going to go to this city-da website.
I'll show you a demo. You're going to search. You're going to go to median house and condo value. You'll see two values there 20203. You're going to write those into your spreadsheet.
It will give you a thumbs up and a thumbs down. And once again, same thing. This 92% it applies to 2025. Do not use this in 20 oh sorry it applies to 2026. So this need this this is a bug.
This applies to 2026. Do not use it in 2027. All right. So now that we've given you the first three real focuses, it's time for me to do a demo. So the first place I mentioned to you was the Fred website.
So, this is the the Federal Reserve Bank of St. Louis. So, Fred publishes an astonishing amount of awesome data. I'm going to go click the back button once and the page that you're actually going to go it go into is this page. It's called the annual estimates of population of metros and micro politan statistical areas, MSAs, right?
So, there's there's 396 metros in the United States. They add a few every year. And here you can see each metro. So, Dallas, Phoenix, Nashville, Austin. Unfortunately, there's no way to search this list.
So, if you're looking for a metro, maybe one of the smaller ones and you don't see it on this page, you're just going to have to go to the bottom and click through these numbers. There's eight pages and you can find your metro. I'm going to go with Boise. So, resident population, Boise. That's one of my favorite cities right now to invest in.
And so, I come to this chart. So, what you're doing on this page is you're scrolling down a little bit and then you're moving the mouse and you're moving it all the way to 2024. And you'll notice that the population of Boise, Idaho as a metro, not as a city, as a metro is 845,877. So, you're going to write that number down into a spreadsheet. And the spreadsheet is coming up.
So, that's what the spreadsheet looks like. So all of you will get access to the spreadsheet. And how will you get it? This this is very important. Please remember what I'm about to say.
The spreadsheet is a link in the email that we will send you on Monday that will have the replay. The spreadsheet is in the same email. So there's there's a link for the re replay and then there's a link for the spreadsheet. So remember that. So this is what the spreadsheet looks like and it has real focus one, two, three, four, and five.
We've discussed these three so far. All right. So, you're going to go in there and you're going to find, you know, whatever your city is. In this case, you know, Boise, Idaho. And you're going to plug in the number for that city, which was, what was it?
It was the 845877, right? So, 845877. Plug that in. And then you are going to go backwards using the mouse to 2015. 675 173 675 173 All right.
Now you might have to drag this down. Normally this works, but it didn't. Oops. Oh well. Stupid me.
I have to I'm going to go copy paste this here. Move this one over and then move this one over. So I I I flip them around, right? So here and you notice that the number is 25.3%. So Boise, as you can imagine, is an extremely fast growing city.
Right? Remember our real focus said, where is the real focus? Let's go to the real focus so that we can compare right there. We were looking for a city that was 10.1% population growth. So Boise is growing 2 and a half times faster than that.
It's very hard to find cities that grow faster than Boise, especially if they're a good size, right? So if it's a small small city like Idaho Falls, it'll probably beat Boise also in Idaho. But large cities like Boise, Boise is a fairly large city. I mean, a metro that's pushing a million is a pretty large metro in the US. And so to have 25% growth in 10 years is a truly fantastic number.
Very few metros in the US will beat that particular number. But that's what came out here. So obviously you can see that you immediately got green. Green is good, right? For this particular metric.
Now where do I get the second metric? Well, city-data.com. Don't forget the dash. Most people, you know, come back and say, "Hey, this thing doesn't work." Well, you forgot the dash in the name. So, I'm going to type in Boise, Idaho.
And here's Boise. I'm going to scroll down a little bit and I'm going to copy two numbers. You see this estimated median household income, right? 7977. Copy that.
And I'll go over here. And this is when is it? This is now >> It's now 23. 23. We don't have 24 data yet.
We'll get it, but we don't have it yet. And then 42. And we're going to plug this in here. And it's not going to work because I need to take the damn dollar sign off. Bummer.
Let's see. Yeah, I think I just have to type it in. So, I'm going to go 42432 79. Actually, have to undo the whole thing. Unfortunately, guys, sorry.
When you overwrite formulas, it messes things up. So, let's try that again. 79977. Type that in here. 79 977.
And then 42432. 42 432. So here median household income has grown by 88%. That's a fabulous number because what did we say for real focus number two? You are looking for 52% growth in median household income.
Boise's income in this time frame over this 23-year time frame has grown very consistently. We don't use a 1 year or 2-year time frame because sometimes you know income can go up and down. We need to smooth it out over a larger time. Well, this city is growing much faster than inflation, which which means that people in this city are actually getting richer over time, even when accounting for inflation. That's good.
That's pretty awesome. When that happens, that's fabulous, right? Same thing here. I'm not going to plug in the third one, but the third one is on the same page. So, let's go here.
And we were looking at the household income here, 2023, 2000. Those were the two numbers we plugged in. If I go down a few inches right here, median house or condo value, I'm going to plug in this number here, 118, and then I'm going to plug in 491. As as it happens, Boise has the highest growth in home prices for a metro ever in the United States. As you can see, in the year 2000, 118,000.
Today, almost pushing 500,000. So here, the multiples are roughly 4x. Right? very hard to find anywhere near 4x, but there are many parts of the US where you can find a 3x multiple. So 3x multiples are fairly common, and that's why I I use this 92% number, and people criticize me for it, but again, there's some logic to the to the way that we're we're doing this, but you're welcome to look for numbers that are significantly higher.
So, we only have to see a 92% growth. Here, we're seeing almost a 4x growth. So, obviously, Boisey is crushing the numbers. If I plug them in here, it's going to be somewhere around 400%. All right, so now you've seen the spreadsheet, you've seen how it works.
Let's go back to real focus number three or number four, I'm sorry. Boom, boom, boom, boom, boom. There, number four. Real focus number four is a change in crime levels. A lot of people criticize me for not including education in my numbers, but statistically speaking, if a city is seeing reduced crime, if a city is seeing a reduced crime, you're going to then see an a an increase in education.
Education is inversely proportional and highly correlated to reduction in crime. So, when you factor in a reduction in crime into your formula, you're basically factoring in an increase in education. you're getting the same data, the same cities will come up, right? So that's why I don't have education in there. And again, remember, I'm trying to get free data so that anyone can have access to this.
So change in crime levels is much more important than crime. So I'm not saying invest in low crime cities. I'm not saying invest in high crime cities. You can do both. But I want you to invest in a city where crime is reducing reducing on a downward level because as crime goes down, property values go up.
Right? So we're going to use city- data again. We're going to go to the page and we're going to scroll down a little bit more and we're going to look for a particular number and you want a number that's below 450. So that's the number itself. But you also want to see it going downwards.
So 450 and going downwards, right? And this applies to cities of all sizes. So it doesn't have to be a big city or a small city, right? And this is the only real focus that you can year use year over year. Meaning you don't it's not going to change next year.
It's not going to change the year after that. It's a dynamic real focus, which means that you can just keep using 450 all the time. So, a year from now, it'll be 450. 2 years from now, it'll still be 450. So, you don't have to come back and grab new metrics.
All right. So, that's real focus number four. And I'm going to give you a demo of that in a few minutes. [music]