So I have a question I would like to ask regarding population growth and it's impact on the Cleveland and Pittsburgh markets for 2-4 unit properties. According to USA.com, both of these cities have had a well below avg growth rate vs the national avg of 11.61%. Only a few suburbs within a 15 mile radius even meet or exceed the national avg of 11.61%. Has anyone seen a decline in the rental markets or found it hard to keep units fully occupied in these areas?
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@David Olson depends on the submarket of Pittsburgh, but I have good luck as long as my units are clean and well maintained. There are lots of old houses so it's not hard to stand out in most neighborhoods in Pittsburgh. My effective vacancy rate on my own rentals is 2-4% because I start marketing properties before the current tenants leave. I invest in Brookline, Beechview, and Dormont. C-B+ type neighborhoods.
@Anthony Angotti thanks for your input!! I asked because I have two markets I have been looking into which are obviously Pittsburgh and Cleveland. Both make sense on multiple levels but I was somewhat surprised when I looked deeper into the population growth %. I will look into those areas you mentioned!
I'm putting together an excel sheet with each zip code and that respective areas crime, population growth, avg income etc. Time consuming but I can't find another way or a website that has a large data dump in excel that I can sort by based off zip or income etc.
@David Olson worst case scenario you will learn as you build it. All that stuff is pretty public record though as you analyze deals.
Pittsburgh is way more street by street than neighborhood based though. Just keep that in mind.
@Anthony Angotti All three of those areas have a negative population growth rate. There are other factors that still make sense in that area though so maybe I am putting to much weight on population % growth rate when deciding which areas to invest?
David, below please find a story from the local paper about this topic.
You have to keep in mind that Pittsburgh is the oldest major metropolitan center in the USA. Florida as a state may have the edge over everyone else, but Pittsburgh beats out any major city in it or anywhere else in the country.
What's going on to cause the numbers is very straightforward: the influx of tech professionals does not make up for the massive losses of old people. You see these low vacancy numbers because typically, old people who die here either die in their own homes or in care facilities. Focusing on the ones who die in place, most of them don't typically live in common rental property locations and so their homes are not easily converted to desirable rentals.
So the rental markets are, despite the population decline numbers, mostly doing quite well. In the last few years, there have been quite a few out-of-state people pouring money into A-class rental construction because they're doing the kind of numerical analysis from afar that you're working on. Most of those A-class rental properties are most definitely NOT doing well.
My advice to you is to partner with someone who knows this place VERY well and to make sure you offer them terms that tie your destinies together completely.
Last I checked the Cleveland vacancy rate was 5 percent. Filled my rental in 3 weeks. Clean and safe and nice looking and you’ll do fine.
@Jim K. you bring up some great points. That article makes total sense and is inline with what you're saying. I would not be seeking A class but more B-C class areas. I am working on getting my contact list of GC's, realtors, and property managers etc. prior to my travels so that my time is best spent with meetings and a productive visit.