Do you buy in an area with a decreasing population?

[Jeff Campbell]

I noticed in this market it has more renters than homeowners. The percentage was 55/45 in favor of renters. It seems like a good deal and looks like the numbers will work. It is a package of 4 with 3 currently rented. 2 of the 3 are with long term tenants. If the numbers work does it make sense to do this deal? The decrease in population isn’t drastic, but it has been on the decrease gradually over the past 10 years. 10 years ago it’s was at a population of about 8,000 and now about 5600.

[James Bradin]

Is the decrease in population due to a large business or employer leaving the area?  If so I would be somewhat hesitant. With a population that small, they probably have some type of employment that a large percentage of the population lives off of, even through 1st and 2nd order affects.  One of my properties is in a smaller military town.  The military base is a driving factor in rent and housing prices in the area, and if it were to go away the population would decrease (along with my cash-flow).  The opposite is true with large employers moving to the area.