Lately, a few folks have asked me how to determine whether a community is in a growth or decline stage. They were curious if it was worth buying real estate in declining neighborhoods. Personally, I think it would be prudent to avoid communities in decline, unless you’re a seasoned investor. It is just too risky for a newbie . . .
I pondered the question further and answered with the most obvious answer: Are there jobs moving into or away from that area?
If there is job growth, there will be growth in commercial and residential rentals. If there is job decline, the opposite is true. For a real world example, look at Detroit – as auto and other jobs have gone elsewhere, so have tenants. How then, you ask, can you tell if jobs are coming or going? Well I recommend getting in touch with your local Chamber of Commerce, and asking about companies relocating into the area. Is there a flury of new companies coming? If so, you can count on good prospects for both commercial and residential rentals.
I’d like to see what everyone thinks of their own communities, and have thus added a post to our real estate forums. I’d love to hear what everyone has to say, so: Is Your community in the growth or decline stage?
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Article Author: Joshua DorkinJoshua has written 568 articles for us.
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Joshua Dorkin (@jrdorkin, Google+) is the founder and CEO of BiggerPockets.Mr. Dorkin's vision for BiggerPockets has helped to propel it into becoming one of the top real estate destinations online. His vision for the site and its future has brought national press attention to both Mr. Dorkin and to BiggerPockets.
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