If you’re new in the business or you’ve been at this for a while, one thing is always true. When you’re looking into any real estate transaction, you will quickly learn that research and preparation are your two best friends. If you put in the legwork to learn as much as possible about markets, properties and demographics ahead of time then you’ll quickly find that you have much more success than if you had not performed this initial research.
When you want to get into the property purchasing business, there are several demographic factors to consider. These variables can influence your ability to sell the property in the future or to rent it at a favourable rate in the meantime. We have outlined some specifications that you’ll want to consider when looking into a property acquisition.
When you’re looking into a rental property to buy you want to closely examine crime statistics as well. Everybody wants their tenants to feel safe and secure when they’re living in their rental properties, but it’s also just good business to take it under consideration. A higher crime rate in an area could put your property in more danger of being damaged and could lead to more risk for you, the investor. Additionally, if you’re in a more dangerous area than the pool of applicants will understandably shrink, as not everyone will tolerate increased crime levels—even if it means a more affordable home. Value can be found in areas with higher crime rates, but it’s important to look at the whole puzzle before making a decision.
The ages of your target renters
You want to take a close look at the ages of renters that you’re hoping to target, as this can affect several things that you want to look into. If you’re hoping to buy a property in an area near a lot of off-campus college housing, then you probably don’t want to target people over 60, for example, as it quite obviously would not be a very good match at all. Different age groups have different needs and expectations – older folks are likely going to have a much lower tolerance for noise and parties, and younger people will likely (but not always) chafe at communities that have a lot of rules and restrictions. Additionally, younger people usually just have less money – especially millennials, many of whom are loaded with significant student debt.
The income of renters is another factor that you want to take into consideration. Income historically tends to rise with age, but there are some signs that that might be levelling off, given the state of the modern economy. In any case, you want to find out as much as you can about the income of your targeted renter groups before you decide where you want to purchase a rental property. If you can ascertain a good idea of the income levels of prospective renters, then you’ll fully understand if the property you’re looking to buy and the rents you’re hoping to charge are within the realm of possibility for those folks.
When you’re looking at potential renters you want to have a good idea of the overall economic situation in an area. You want to know what types of industries it has, as well as what the variety of jobs look like. Are they in areas and industries that are projected to grow, or stagnate? Are the jobs that are tied to dynamic industries that can ebb and flow, like extraction industries? Or are they in areas that are projected to grow indefinitely, like home care or software development? Ideally, you want a local economy that shows both variety and growth, because this can help distribute risk more evenly and make sure that there is also a pool of tenants with reliable employment that you can select from. This means a safer investment for you and a better chance that your property realizes its potential.
Schools in a neighbourhood
Every single one of us wants the best for our kids – for most people, it’s their top goal and priority in life. As a result, if you’re interested in renting to families, especially ones with young children, then you want to look for properties that are in areas with the best possible school systems. This makes your property all the more desirable to families with kids and can help inform your marketing and informational purposes when you’re looking to target specific types of renters. This is a factor that you can’t always control, but it’s worth doing the proper research into school systems in an area and seeing if it’s worthwhile to look into a property in those areas.
Population levels of the area
The status of a population in an area is the final demographic statistic that we recommend everyone consider. If you’re like most real estate investors, then you want to buy in an area that shows promise and growth – an increasing population is usually ideal, for the most part. If a population in an area is growing, that means that there is likely to be more economic opportunity there, making it a hotter place to settle down. When your area gets “hot,” it gives you a larger pool of qualified applicants as people stream in looking for work in a dynamic economy, which can greatly increase the value of your investment.
Looking to buy a rental property is one of the biggest decisions that a prospective real estate investor can make. Researching the areas that you’re considering can be hugely beneficial, and should be considered a mandatory exercise at this point. If you have all of this information at your fingertips, it will be time well spent and will help you make the most logical and beneficial investment decision. It’s good business to consider all of these variables, even the ones that don’t immediately meet the eye.