Level Two ResearchIn Portland, we were a couple of desert dwellers from Arizona who came armed withinformation but hadn’t seen rain in months let alone trees that actually bear leaves. We wereas green as the Portland landscape. We plunked right into this market knowing no one. Wewere prepared, however, to conduct Level Two Research once we got there to develop ateam that would help us understand the market and maybe even lead us to property.Research plays an important role in establishing yourself within the market and finding thepeople who will help you make things happen.Level Two Research is about meeting face-to-face and we didn’t waste time. Evenbefore we arrived we had made phone calls to set up meetings with property managers,commercial brokers, commercial lenders, city officials, and businesspeople like thepublisher of the local apartment guide. When we arrived we met with each of them. First ofall, they were amazed at how much we knew about the area and the depth of ourknowledge. They affirmed the things we presumed to be true and set us straight on theassumptions that were off base. For instance, they confirmed our assumption that thelimited supply of housing in downtown Portland was greater than in any other area of thecity. They confirmed that there was a high demand to live and work in the city. Theyconfirmed that the downtown area was not only a vibrant, progressive community for thosewho lived there, but that it was also a draw for people who lived elsewhere through itsSaturday markets, jazz festivals, holiday events, convention center, Rose Garden, parades,and more. It was a true city center.We didn’t get everything right during our Level One Research, though. The people wemet with surprised us by painting a gloomier picture of the outlying suburban areas than wehad painted ourselves. There was more overbuilding than we had assumed and there wasmore available land than we had assumed. Nike and Intel had a very large presence therewithout much other employment of any size. The overall picture was clearly a risky one.It was during this time that we really started narrowing in on our submarket. In anyeconomic downturn, it’s always smart to be in the market that will turn positive first. That’strue of anything in business whether it’s the stock market, a business sector, or real estate. Sowe looked at several submarkets and determined that downtown Portland was strongest atthis point and would be the first to rebound based on the simple economics of supply anddemand, its diversified employment base, and lack of affordable housing. We learned that asthe economy rebounded, the downtown market would be the area that rebounded first.While we were meeting with all our contacts, we clearly communicated our goal to buy a200-plus-unit apartment community and asked them a variety of questions like: who theirfavorite property management people were, what lawyer they recommended for legal work,if they knew any good accountants. We asked for recommendations for every team memberwe listed in the last chapter. By the time we left two days later, we had a vivid picture of themarket, and we had narrowed our search to a viable submarket. We had some good leads forour team, and we were told of several properties that were possibilities. We also took in thesights, ate wonderful dinners, and generally enjoyed our time in Portland.
Level Three ResearchWhen we returned to Arizona, we not only vividly remembered what green trees lookedlike, we knew Portland was an investment opportunity. But we still needed a bit more
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