Can anyone tell me what are some good ratios to consider when one wants to compare the markets in different municipalities?
Not sure what you mean by ratios to compare. To identify markets to buy in check this article out: https://www.biggerpockets.com/blogs/10145/66160-ho....
When I am comparing markets, I look at what the industries are. Ideally the city would have less than 20% in one industry. I also look at rental affordability. I would like to see the average rent compared to the average income at 30%. Also having owner occupied loans less affordable than rent is great.
Hi @Juan Medina , I would focus on population and job growth as well as rent growth, vacancy rates, and the unemployment rate. You can find some of this information on the Census Bureau website. I also like to look at the reports published by the large commercial brokerages. I generally compare individual markets to the nation as a whole.
@Brendan Kelly Thank you for taking the time to share your input. Great stuff. I didn’t think of comparing markets to the nation as a whole, but now that you mention it, it makes sense. One more questions, what is a good benchmark for population. I’m thinking 10,000.
Todd, Thank you. I will look into the article now.
I use 500,000 as a minimum population of the MSA. I would go with a smaller population near 100,000 if it was close to home. The issue with a town of 10,000 people is that there is a shortage of skilled workers. Hard to find a repair person, manager, etc. Also, hard to find tenants.
@Juan Medina You're welcome.
I agree with @Todd Dexheimer that 10,000 is too small. Now, if you're talking about a 10,000 person neighborhood or community in a larger city or msa, then this likely isn't a problem. Rural locations with small populations can be difficult unless your property has some sort of project-based subsidy (ie section 8). The subsidy helps mitigate some of the risk.
Unless you're very involved or doing the management yourself, I'd probably look for an area with more population.
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