Buying Multifamily in a Shrinking Town

[Brian Barnes]

Hello, all!

Longtime podcast listener, first time poster. Looking forward to hearing your insight into my (potentially) first real estate investment.

I have decent capital, and I am currently interested in buying an small, 8-unit apartment building. The numbers are great, from everything I can see. It's above the 1% rule, and I would get it to even further above. It's cash flowing nicely. It's in a near zero crime area. There's just one catch: It's in a shrinking town in a shrinking area (population wise). However, it is about 15 minutes outside of a state capital, which makes me think the area must stabilize and reverse eventually.

I am NOT looking to make a quick buck. My focus is buy and hold for cash flow. I am well aware of the conventional wisdom of buying in a growing area, but please let me know what you all think.

[Brian Barnes]

Originally posted by @Bonnie Low:

It's good that you're thinking about this. A lot of people are so focused on the numbers that they overlook other important metrics. How much have the area demographics changed over the last year due to COVID? Many rural and suburban areas are experiencing "pandemic growth" because people want out of the City centers and many can now work from home. How recent are your population stats? Have you talked to anyone in local government? I call Chambers of Commerce to learn as much as I can about business activity in the area and I would call or visit City Hall to find out what they're doing to attract businesses and residents.

This is actually part of the risk. I do not have population data beyond 2019. I have not yet reached out to anyone from the local government, but I have considered it. Unfortunately, I live on the other side of the world right now, so calling during normal working hours is more burdensome than I'd like. But I definitely will reach out somehow.