xhv8mzw7ge79waga35o97s2wbzpfr6 5 Stats You Should Know When Analyzing a Real Estate Deal

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5 Stats You Should Know When Analyzing a Real Estate Deal


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. Special thanks to our friends over at Grocapitus and MultifamilyU for giving keynotes on this topic.


5 Stats You Should Know When Analyzing a Deal


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



What are the 5 Steps to Analyzing a Neighborhood?


Head over to the free training video from FIG's Real Estate Investment summit. How to Analyze a Market in 60 Minutes and Know More than a 'Local Expert'