How To Analyze Demographic Data Before Investing

When it comes to real estate investment, there are many factors that should be considered before taking the leap. Investors often speak of the general economic conditions as their main impetus for investing or holding back. However, this should not be the only criteria that you work under. Demographics should also be very carefully considered. Here are three reasons to analyze demographic data before investing in real estate.

Age and Spending Habits

You might think that a younger, more vibrant population is where the money is, but you may be wrong. Consider the fact that a twenty-something is likely to have student loans, very little savings, and less experience in making sound financial decisions. Not only that but, younger people are less likely to have the funds and stable career that it takes to buy a home.

Financial newsletter writer, Harry S. Dent, Jr. has done some impressive research that reveals that human spending habits follow a predictable path. Most notably, spending on homes hits its peak between the ages of 46 and 50. Therefore, if the demographics show a population in that range, it may be a good indicator of a viable market should you be interested in flipping an investment property.

Jobs and Population Growth

Simply put, if people cannot find a good job, they are not going to be able to buy or rent a home. That also means that the population in the area is likely to decline, rather than grow. Take a good, hard look at the trends in employment in and around the area you are thinking about investing in. Dig into those numbers and look for indicators that the population and job opportunities are changing.

Rentals vs. Owner Occupied

Another important demographic that you need to take a look at is the percentage of rental homes versus those that are owner occupied. If you’re most interested in buying, remodeling and flipping houses, you’re going to want to look at areas where the owner occupancy is higher. Likewise, if you’re looking for an income property, a predominantly rental oriented area may be best.

Although you’ll get some indication of the viability of a rental or flip from that data, it doesn’t tell the whole story. You also want to know what the rental occupancy rate and average rental rate are so you can determine whether or not you can recoup your investment. If you’re flipping, you’ll want to know the average home sales price so that you can manage your investment to make a profit when you sell.

If you’re a real estate investor with questions about using demographic data, investing in properties, or you’re looking for an investment partner, contact us. We’re experts at helping investors find the money they need to invest in properties with promise.

Protect Your Commercial Real Estate Investments from Fire

Protecting a rental home from the perils of fire is a very hot topic today. Commercial insurance will protect you and your lifetime investments in the unlikely event of a fire. Check your policy for fire coverage.

Did you know that every year problems cause more than 28,000 house fires and massive property damage? Most recent insurance studies indicate “Fires” as causing more than $1.3 billion in property damage (National Fire Protection Association, 2003-2007).

1] Flickering lights, buzzing noises, and face plates that are warm to the touch are all signs that a circuit may be overloaded, or wiring may be wearing thin.

2] Listen to Your Breaker — If you are continually tripping a switch and having to reset your breaker box, your house is trying to tell you something. There may be a fixture with faulty wiring or too high an electrical load on the breaker.

3] Review and Replace — Frayed electrical cords, wobbly ceiling fans, and loose face plates are more than mere annoyances. You should routinely inspect your home and replace or repair items in need of attention.

4] Working smoke and cigarette detectors on all levels of your home is an absolute must. Make sure you have a working fire extinguisher, and you know the proper way to use it.

5] Ban natural Christmas Trees, there are 1000’s of fires nationwide every year.

6] Never rent to smokers of anything, aside from the thousands of dollars third hand smoke causes to a property. Just one errant cigarette or joint can burn down your investment property.

7] Outside BBQ, Deep Fryers and Smokers can cause grease fires.

It is important to consider fire safety at every stage of commercial real estate investing.

This article was developed by Winston Rowe and Associates. They are a nation consulting firm that specializes in working with commercial real estate investors.