Investing in declining areas

[Stephen Kunen]

 We are looking at deals in the declining area with very good cash flow. By declining I mean the population has been going down for the last couple of decades. Do you think it's a good idea to invest in this kind of area? Our concern is that even if it cash flows now we might have difficulty renting it out because the population is declining. Thank you!

[April Crossley]

Following : ) I know a lot of investors that are doing this right now because they are unable to find deals in their markets. To me, it is more risk than I am willing to take on.  My best advice would be to pad that vacancy rate.. A LOT.  AND.. meet with the local chamber of commerce in these areas, and local township offices, and ask them what, if anything they are doing to revitalize and what jobs may be coming to the area. A lot of times they will have some insight on this.  Its great if you can get in while things are down and about to swing back up.  I'm from PA- and I know in northern PA there are a lot of just dying counties that used to be booming coal towns. Some of my investor friends have jumped in full force into these markets because they claim they can't find deals in our market. Some are just tip toe-ing into these markets and saying: "honestly, I don't know if I will even be able to find tenants so I am just buying one single family at a time and not buying a second until I see what kind of response I get on a for rent ad."   On the flip side- a lot of the really hot markets are becoming too expensive for people to live and rent in, so they are living on the outskirts and commuting.  I think you have to be careful about how far into the outskirts you are willing to buy. I believe the average commute time in the US is 30-45 min so I would take that into consideration. Also are there any hospitals, community colleges where you are buying or distribution centers-- stuff that usually brings steady jobs.