Population: A Macro Indicator

This is something I have written about in the past and thought to touch on again given the acceleration in population trends since the pandemic hit.

Population trends are important for both rental investors and flippers.

Population Growth

When it comes to flipping your goal is to buy, renovate and sell in a reasonable time frame.   During the time of buying and renovating the market will not stay still.  The world still turns and markets fluctuate. 

However, demand is something that can be ever present in areas with growing populations.  More people means more families, means more home buyers which is good for your business.

As opposed to an area that is seeing a shrinking population, which means less people thus less buyers and softer demand.

The same impacts hold true for rentals.  The worst thing for your rental property is having it empty.  Vacancies cost money and a shrinking population puts you at a higher risk of soft demand which can lead to taking reduced rental rates to fill your units.

That is one thing “buying right” cannot save you from.  Granted we factor in a month’s vacancy when running numbers in the property calculator to help us buy right, but multiple months of vacancy or a shrinking rental rate will quickly blow out your numbers.

This population thing sounds simplistic, I know.  However, it is still very valuable and should be one of the key indicators you use when picking an area to invest in.

Population Data:

With the internet information is at our fingertips these days so there is no excuse to not check out this data.

For population numbers I like to look use the city-data.com website.  It’s pretty straightforward and simple to use and provides all sorts of data in addition to population info.

Using tools like these can help confirm trends that you are already hearing about.  Such as the migration to the southeastern states.  We know it is happening, bit where exactly?  Is it all of Florida for example or are there cities growing within that state while there are others that are not.  Here’s a hint, the answer is yes.

Steady populations too

Let me also mention you don’t need to only invest in areas with a growing population.  Finding an area that has a steady solid population is fine too. 

If I see the population fluctuating up or down a percent I will still dive in if there are good deals to be found in the area.

You mainly want to pay mind to areas that have a trend of shrinking population over the last few years.

In the end, remember to buy right.  Use the property calculator to run the numbers on your rental deals.

 

 

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