All Forum Posts by: Daniel Rivera

@Daniel Rivera Unfortunately it all depends. I grew up, still live and invest in rural South Georgia, where most all of the areas have decreasing populations but you have to dig deeper to know what type of demographics are actually decreasing.

The middle income demographic has been consistently steady the whole time it’s the high earners that are moving out for multiple reasons which is causing your A+ properties to suffer. While your blue collar properties have been able to do fairly well.

I will say though, that when looking at your data, make sure that there is a variety of industries in that area. For example, healthcare, education, manufacturing, etc. You can put yourself at risk if it’s heavily centralized in one industry. IE: Detroit

I would second @Ali Boone in that you should be careful investing in rust belt cities

Your main job as an investor is to keep your money safe, and even though the numbers look great on paper the tenants are usually poor quality in these places.  With a recession around the corner, most investment funds / smart money park their money in high wages cities like in Texas or safe havens like washington DC where you got high paying government jobs

It looks like the only thing going on in cities such as Detroit and Cleveland is real estate pumped by out of state investors. Turn key rentals businesses, realtors and flippers are for sure making a killing for now but my guess is that many of their buyers will be holding bags within a few years when the economy takes a hit

I'll chime in on this one. And this isn't to say your property won't continue to be successful or whoever's. But in general, it can matter if it's a place people want to be or not because of- sustainability of those numbers. You can project numbers all day long and even get them for a while, but are they sustainable? Take Detroit as an extreme example. People owned properties there, all was good and gravy for cash flow, and then boom the city tanks and everyone moves out of it. Now the only people who were left to rent were making meth. (exaggeration but true to some extent). So either property owners couldn't get renters or got terrible ones who destroyed the property.

So the concern, anytime you are talking about a declining market is the factors involved with what it will take the numbers to stay where they are. Will there always be a tenant pool, can you always get quality tenants who won't trash the place, etc.

Old article, but goes into more detail-

https://www.biggerpockets.com/renewsblog/declining...

Again, this won't always be the case and the town the poster is referring to may be completely fine and profitable to invest in. But to answer your question- those reasons are why it matters and should be looked at.

@Daniel Rivera

I just bought a property in Xenia, Oh in December. I analyzed it and it was renting for 2% rule after paying utilities. I think as long as the numbers work, go for it.

The worst that can happen is that you lose a little bit of money and learn a valuable lesson. I’m waiting for my first distribution from my property manager. Feel free to PM me to get updates.

@Brian Ploszay

Can you elaborate when you say "value"?   Obviously in small midwestern towns, cash flow is king and the only factor, as we all know there's little to no meaningful appreciation..   

I invest in a very very similar sleepy depressed town, so your answer somewhat applies to me as well..  As long as the numbers (price and rents) make sense, not sure why it matters if its a place where people want to be or not?

The town I invest in hasn't changed in 20 years, and will prob never change..  Steady Eddie as some would say, definitely not sexy though..   

Isn't the census data 8 years old at this point, or are you looking at something else?

I have a contrarian view.  I believe that small midwestern towns that are in decline are not going to create value in the long run.  Go where people want to be.  

Next, some of those towns may have a weak rental market.