Population and Vacancy

[Joe Davis]

Hi BP Community!

I thought I would take the time to briefly introduce myself as I have been lurking the BP forums for some time now.

I am relocating to Houston from London, UK with my wife and daughter. I am 33 years old and worked in recycling for 13 years. However, I sold my business in October and now am looking for a new career....the rest is history as they say.

My first questions actually have to do with population & vacany levels. To test the waters I want to try to purchase with cash lower value homes in the surrounding Houston areas (all the way out to Beaumont, Galveston, Conroe) etc. In some of these towns, the vacancy rates don't seem incredibly high and the rental to owner mix seems fairly balanced.

1) What would be the minimum town population you would consider a Buy & Hold property in?

2) When analysing areas for rentals, is it better to look for those which have a more balanced rental to ownership ratio, or are you looking for a much higher % of rentals indicating a more working class area and better for reduced vacancy rates.

Thanks in advance (unless nobody answers) :)

Also, I would love a mentor in this industry - anyone in Houston who would consider it, I am sure I would have a lot to offer in the short and long term.

Cheers! (As we say in the UK)

Joe 

[Jonathan Twombly]

@Joe Davis, take what I say with a grain of salt since I am primarily a multifamily investor, but your question caught my eye because you mentioned population, which is one of the things I focus on.

For a larger multifamily property (over 50 units), I would say stick to metro areas with more than 100,000 population, just to make sure you have enough buyers when you want to exit.  

But for single-family homes, I would say that the things to look at more than population per se are population growth and supply.  I personally would never invest anywhere the population is not rising, so if it's rising, you have one green flag right there.  Next, if the supply of housing (especially) rental housing, is not keeping up with population growth, then you have another really nice green flag.  Generally speaking, since it takes a while to permit and build, supply lags behind growth in strong-growth markets, putting upward pressure on rents.  But don't take this for granted.  If you find out, for example, that the municipality just changed the zoning and a lot of multifamily rentals are going to hit the market at the same time, that would be different.  So make sure to check it out.  But population growth is the key.