Have you heard of any friends getting burned on an investment deal?
We have and it’s always unfortunate to hear. To help combat risk, we’ve thrown together some examples of the best ways to vet out bad real estate deals when you come across them—that way you don’t get burned too!
These steps apply to all asset classes, residential, multifamily, etc.
STEP 1 – Know Population Growth
How: Google “population [City], [State]”
What’s Good: Aim for 20% pop growth between 2000 and 2019 (for cities between a quarter-million and 1 mill in pop.)
Example: Provo = 34.45% growth since 1990
STEP 2 – Know Median Household Income Growth
How: Search for the city on city-data.com
What’s Good: Aim for 30% growth between 2000 and 2016
Example: Provo = 36.63% growth since 2000
STEP 3 – Know Median House/Condo Value Growth
How: Search for the city on city-data.com
What’s Good: Aim for 40% growth between 2000 and 2016
Example: Provo = 71.57% growth since 2000
STEP 4 – Know Change in Crime Levels
How: Search for the city on city-data.com; scroll down to the crime table
What’s Good: Look for crime to go down and for the most recent crime number to be below 500 (Crime is directly tied to delinquencies/evictions)
Example: Provo = 205.7 in 2002 down to 166.1 in 2016
STEP 5 – Know 12 Month Job Growth %
How: Search for the city/metro on deptofnumbers.com/employment/metros
What’s Good: Look for numbers above 2% annualized job growth (1.5% for cities over a million)
Example: Provo = 3.65% Increase