What Demographics/Market to look at when buying?

[Mary D.]

Hi

What am I looking for to justify buying in an area and where is the best place to find this info?

As Im looking at new territory, for me anyway. Multi-families. And most of what Im looking at are out of my familiar area.

I usually look in the town/cities/state website. BiggerPockets. Nerdwallet and research web to find local opinions/facts...

Thanks,

Mary

[Johnny Kang]

Hi @Mary D., 

It really depends on what you're looking to get from owning multi's. Some people are ok focusing on cashflow, so for instance, they might buy in areas where 2% rule is more than a possibility and that's their main concern; reason why some focus on buying mobile parks. Others like a little appreciation play, so they might consider buying something that perhaps only meet .08% rule, yet they see much more upside potential in that area and decide to buy there.   

I personally look for areas where it will cashflow somewhat, but there's been an uptrend in job growth, more establishments coming in where people spend their discretionary income, and areas where the township/county/city HAS WRITTEN PLANS of changing a specific area, because cashflow alone diminishes your ability to grow exponentially and scale. If you can find an area where written plans to change the community are available, and you can get in at the cusp of the initial phase of change this will be very advantageous.  

So once you figure out what your personal investment profile is regarding the area class you'd like to buy in (A, B, C, D), then the type of property class (A, B, C, D), you can look at demographics/market info such that it gives meaning to the data you're look at.  

With that said, here are some demographics/market data you can look into:

1) Interactive Demographics Map from the Census: Interactive Map (this map is a little finicky, but once you get used to it, you'll get valuable visual info)

2) Federal Reserve Economic Data: FRED (provides charts dating back 10, 20, 30, 40 years so you can see how things have been trending)

3) Census Quick Facts: QuickFacts (provides charts at the State, County, City level regarding various data) 

4) Bureau of Labor Statistics: Labor Stats

5) Google what businesses are in that area. 

Once you've narrowed down the area you'd like to invest, start analyzing properties, drive around, hang out there, talk to the locals, read local publications to see what's going on, talk to the town's economic & community development people. The more you do it, the easier it becomes and things will start to make sense. Hope this helped.