It is crucial to analyze a market before you invest in it

It is crucial to analyze a market before you invest in it.

There are various factors that you can analyze to have a thorough, multidimensional analysis of the market. These include population growth, job growth, median rent, and median income.

Certainly, some of these factors are interlinked too. For example, you’ll never see job growth and population decline in the same area. Now, here’s another great piece of advice for median rent and income analysis:

Make sure the median income is 3x the median rent (or the rent you want to charge).

It is highly recommended you follow this advice because you wouldn’t want to have a tenant who cannot afford your property.

Next, analyzing the crime rate of an area is also a crucial step of market analysis. Investing in high crime areas doesn’t only pose risk to your properties but you may also face hurdles finding tenants. After all, why would a good-earning and law-abiding citizen want to live in a high crime neighborhood?

TIP: Check TRULIA to analyze crime rates of various parts of the city

Lastly, consider talking to property managers, investors, and contractors working in the market as the last step of market analysis. You’ll always gain a very practical and filtered insight into the market by such discussions.