Determining Rental Demand

[Nghi Le]

I've driven past some empty apartment buildings on a trip a while back.  It didn't cross my mind until now (since I haven't ever considered investing in apartments) that maybe I should have done something about it.  Right now the biggest question in my head is, "If I build it, will they come?"  What's the best way (or some different ways) of determining this?

[Adam Sanders]

If you are in a large city you can often find information on vacancy rates online or pay to get that data. If you are in smaller markets you can do your own research to roughly gauge the demand as well as the by: 

• Looking at the inventory that is currently on the market online
• Calling around to the larger multi-family complexes to get a feel for their vacancy 
• Analyze population and economic trends in your area. If the population and economy are growing at a decent rate it is likely so will housing demand
• Look at rental patterns, if rents are going up it is likely because of demand. If rents are decreasing there may be excess supply
• Check with your local government and look at the data they have around new construction that is starting up or in progress
• Talk to other people in your area who own apartments to get their thoughts (check out your local real estate investors clubs to start)