Bickelhaupt says another surprising thing about that market was how quickly people wanted to move in immediately after signing leases. At first, he thought that was a red flag. It was also difficult to turn things around that fast.

Underwriting

(0:30) – Bickelhaupt says tracking jobs in a secondary or tertiary market is difficult, because it’s user tied to fewer industries. 

“What’s been interesting in like a Prescott market is that most of our leases come from drive-by traffic. So we could spend really whatever we wanted on marketing or however we might typically do it through some sort of online campaign, Google, Facebook, Snapchat, whatever we do to capture residents here doesn’t work at all there. There, it’s the old-school flag, it’s the welcome mat, it’s the greeting at the door.”

Bickelhaupt says another surprising thing about that market was how quickly people wanted to move in immediately after signing leases. At first, he thought that was a red flag. It was also difficult to turn things around that fast. 

(2:30) Bickelhaupt says he’s tracking secondary markets that have a little bit of everything. Art, culture, good restaurants, and some sort of college campus can make for a great town with solid energy. 

He spent time sitting around in a local convenience store, keeping record of the type of people showing up, just to get a feel for the market.

What the Data Says

(4:17) – Building in a secondary market can be more expensive because of trades. There also might be growth constraints put in place by the city.

“You could argue there’s a lot more risk in a secondary market, but there was also much more of a reward,” said Bickelhaupt. 

Building in a market that isn’t used to seeing lots of new construction can be scary for the people living there. The Tanbic Company would knock on people’s doors to let them know what they’re building to ease their minds.

(6:40) – Knowing your market and the challenges the people there face is important. For instance, in certain places, water can be like gold. 

(7:40) – Now that Bickelhaupt has data from his first builds in Prescott, he wants to build more. He knows what he can add in, like elevators so people don’t have to carry their groceries upstairs, for example. 

In that first build, he attracted people from out of town. This next time, he wants to bring people in from the same community.