Formula that indicates a good rental market.

1 Reply

My wife and I have been investing since 2004.  We buy and rent out homes.  We currently own 11 homes and 1 4-Plex.  All are properties are in one city except 1.  My question is how do you guys determine if a market is good for rentals?  Meaning, how do you know there is a demand in a community?  We just got real lucky with the area we chose by accident.  We want to buy a 41 unit, 68 unit, and 12-plex in another city.  It only has a population of about 11,000 people, which is smaller than we are use to.  The 41 units is 85% full, 12 unit 58% full, and the 68 unit is 82% full.  We feel it is not well managed and that with our management style, we could fill the units up.  However, what if there is a decline in the demand for apartments?  How will I know?  

I'd take a look at the vacancy rates in the area you're looking, as well as the homeownership rates vs rental rates of the population. Jobs, wages, and migration are also other key metrics that help determining the strength of the market in which you are trying to invest.

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