How to measure the supply/demand for rentals in your metro area?

[Jeff Benson]

BP Members,

I'm new to the multi-family/apt area of RE and I've spent some time analyzing my metro area (and we are thinking of moving to another major metro area-that's another story).  However, I've found a wide range of potential opportunities, but I'm not sure how to narrow down the best area.  I'm looking to understand how to measure the supply vs demand of rental units.  Maybe this simple example will help.

In Suburb #1, I found 10 multi-fam units with good cash flow ($100/door). Lower initial investment.

In Suburb #2, I find only 1-2 MF units with better cash flow ($175/door).  Double the initial investment of #1.

How do I know if Sub#1 has a declining demand for rentals?  Or does Sub#2 have high demand rentals?  How is supply vs demand measure in the rental market (and thus helps to establish the market rent?)?

Regards,

Jeff