How to find Potential Growth Neighborhoods

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How to find Potential Growth Neighborhoods

Nick Gerli
Investor · Austin, TX · Member since 2020 · 72 posts · 77 votes

The 18 to 44-year old demographic comprises 70% of the rental housing demand in the US. 

Accordingly, the higher the share of 18 to 44-year olds in a neighborhood, the higher the demand for rental housing (see the relationship in the graph below). 

Yet there are certain neighborhoods that have a high share of 18 to 44 but a low share of rental housing units (green dots in the graph). 

For instance, there's a neighborhood south of Nashville that has an 18-44 population of 2,908, but only 276 rental units. There's probably some pent-up rental demand there, which could result in good rent and value growth. 

What does everyone think about this methodology? How would you look to take advantage of a shortage of rental demand in a more owner-driven area? 

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  • Luka Milicevic
    Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes
    5y

    @Nick Gerli

    To be honest, these graphs and stats that are created by "the experts" make me very skeptical. I have honestly almost always experienced the opposite or not anything close to what the data says. The boots on the ground seems to be more accurate than the folks sitting in offices coming up w this data. 

    In Nashville, almost every landlord I know has said there has been a slow down in rental demand over the past few months. As a result, prices have come down. (Slightly). 

    I don't know what neighborhood this is in South Nash, but I imagine it follows the same trend as most of the city. 

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  • Nick Gerli
    OP
    Investor · Austin, TX · Member since 2020 · 72 posts · 77 votes
    5y
    Originally posted by @Luka Milicevic:

    @Nick Gerli

    To be honest, these graphs and stats that are created by "the experts" make me very skeptical. I have honestly almost always experienced the opposite or not anything close to what the data says. The boots on the ground seems to be more accurate than the folks sitting in offices coming up w this data. 

    In Nashville, almost every landlord I know has said there has been a slow down in rental demand over the past few months. As a result, prices have come down. (Slightly). 

    I don't know what neighborhood this is in South Nash, but I imagine it follows the same trend as most of the city. 

    Luka - you're right! Data will never replace on the ground feel and experience.

    I also think you're right that a neighborhood will largely go as the city goes. But - if you wanted to find the best place to invest within a city - don't you think it would be worthwhile to consider the areas where renter demographics exceed supply?

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  • Luka Milicevic
    Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes
    5y

    @Nick Gerli

    If I was looking for places to invest, I would most certainly want to fill supply gaps vs going into areas that are over supplied or at equilibrium. Always want the economics working for me vs against

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