Let’s Talk Demographics

In our series, Finding the Right Property for Your Goals and Budget, you’ll learn how to find a property that is the right fit for your portfolio. We take you through every single step and show you how to avoid a bad deal. 

One piece of criteria you must think long and hard about is whether “good demographics” should be part of your search for a property. Real Estate Investing is possible in any market and in any location. Understanding the location you are investing in is key to being successful with that investment.

Discussing stats, demographics, employment rates, vacancy statistics, school districts, etc. is incredibly important. But these topics should only come in to play AFTER you have established your number one indicator of success in your rental property.

Investors from all over can agree, people get screwed over by people —not by the stats, not by the demographics, but by people. You have to focus first—and solely—on establishing trust and relationships with key people on your team. You need a good accountant, attorney, real estate agent, contractor, and property manager. That is what’s going to make you successful or not.

Balancing Act
Of course, knowing the demographics can be immensely helpful, particularly with understanding the types of tenants you are likely to attract in any particular area. Understanding the area can help you narrow in on your numbers and have a more well rounded strategy for any particular property. It will allow you to adjust your estimates of vacancy rates, projected income, etc. – giving you more accurate numbers to work with when you place an offer.

If you don’t have a team in the area you’re looking to purchase, you may need to rely on stats from online resources. Some resources include:

www.cityprotect.com

www.neighborhoodscout.com

www.city-data.com

The Importance of Establishing Trust

You may have heard the saying (or something similar): If you buy the best house, on the best street, in the best area, with the best capital growth projections, but you don’t have the right people in place- you’ll still loose money. It really doesn’t matter how good the stats and demographics are if your team is incompetent.

Focus on the people first. Make sure that those people have your best interests at heart. Real estate is not a one-night stand. It’s a marriage, meaning you have to like and respect each other.

It’s going to take five, ten, or maybe even fifteen years for you to build a substantial portfolio – to get to where you want or need to be.

Remember the concept of delayed gratification within relationships. Plant the seed now and reap the harvest later. And then, once you have established trust and relationships with great people, it will be time to look at the stats, the demographics, the cash flow, the price points, the school districts, the vacancy statistics, and all of those numbers.

Next week is the final article in the How to Find the Right Property for Your Goals and Budget series. If you’ve been thinking about buying a fixer upper just to get into a certain neighborhood, then “As Is” Property – Deal or No Deal is for you.