Demographic Trends All Multifamily Investors Must Understand

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This Money Monday$ we will be walking through the demographic trends all multifamily investors should understand when finding/analyzing deals!

VIDEO TRANSCRIPTION

00:00
working on oh hanging out with brad
00:02
turner and brian murray i know i’m sorry
00:04
you know there’s money mondays though we
00:05
do this every monday 3 30 central
00:07
almost every monday and you know for
00:09
those who are 99
00:11
of the mondays out of everything we’ve
00:13
missed maybe two for the year we’ve done
00:14
this for about a year now yeah well
00:16
we’re probably gonna miss next monday
00:17
too folks
00:18
yeah we all you know that’s because of
00:19
july 4th but
00:21
you know we will be back the following
00:22
monday and talking about some cool stuff
00:24
about real
00:25
absolutely but with that said we do this
00:27
every monday 3 30 central we talk about
00:29
a bunch of different topics
00:30
today we’re talking about demographic
00:32
trends to be aware of as a multi-family
00:34
investor yep
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and you know we’ll spend the first 15-20
00:37
minutes talking about that and then
00:38
we’ll spend the last
00:39
you know 10 minutes or so doing q a
00:41
topics of anything so if you have
00:43
questions comments feel free to suggest
00:44
them
00:45
if you have topics for future ideas you
00:47
know let us know as well
00:48
no we want it to be interactive folks i
00:49
mean it’s very important for us not to
00:51
you know just talk about everything that
00:53
we want to talk about we want to we want
00:54
to hear from our audience and what you
00:56
guys want to hear about
00:58
and what you guys want to talk about and
00:59
we’ll get up here we’ll talk about
01:00
anything from being an entrepreneur
01:02
to tech to real estate not just
01:05
multi-family to
01:06
you know investing in general so please
01:08
you know drop us a line
01:09
drop us a comment we’ll talk about
01:11
anything you guys want so let’s get
01:12
right into this
01:13
i got my coffee as everybody knows
01:15
starbucks the good stuff
01:17
so demographic trends all multi-family
01:19
investors must understand
01:21
so this is not an all-encompassing list
01:24
right
01:24
we could talk about this for probably
01:26
several hours if we really wanted to but
01:27
this is a 20-minute show with 10 minutes
01:28
q and a
01:29
right so we’re going to blow right
01:30
through this these are some of the major
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things that we look for
01:33
right so think job growth right i think
01:36
that that’s
01:36
probably the most important thing right
01:39
you know
01:40
um along with population growth those
01:42
things kind of go hand in hand right so
01:44
the more population moves in the more
01:46
jobs jobs
01:47
move in more population goes in they’re
01:49
very symbiotic
01:50
in terms of you know the growth rates
01:54
most of the times it’s going to kind of
01:55
go like this along with each other
01:57
but it’s important if you see both of
01:59
those right and people always ask why do
02:01
you care about population job growth
02:03
right
02:03
because it ultimately drives demand for
02:06
rental
02:07
product right and any whenever you
02:09
increase the demand
02:11
for your apartments or for your rent
02:12
houses or whatever you’re trying to
02:14
lease out
02:15
right that’s going to drive the price of
02:17
the rent up
02:19
because there’s more demand versus
02:20
supply right this is economics 101 stuff
02:23
and so population and job growth are
02:25
going to really really do that
02:26
especially
02:27
you know it depending on the jobs that
02:29
you’re that you’re trying to cater
02:31
towards right and you know we always
02:33
talk about you know
02:34
fortune 500 companies moving here to
02:36
houston in particular right and people
02:38
are like well you’re not catering to
02:40
the white collar upper management person
02:42
that’s you know coming in and
02:43
and just renting for six to twelve
02:45
months no no i’m not of course not
02:47
right but that person is gonna go you
02:49
know buy a latte from starbucks
02:51
is going to shop at target is going to
02:54
go to the mall it’s going to go to
02:55
restaurants right
02:56
those are for the most part where the
02:58
demographic of our class c and b tenants
03:00
are going to work at
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so it all feeds together so you want to
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see
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job growth across the board and
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ultimately understand that a class
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tenants
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you know even if they’re not you know at
03:11
your property right they’re going to be
03:13
shopping in and around that area and
03:15
that’s going to drive demand for
03:16
your rental units so those are probably
03:19
the two most important metrics that we
03:21
look at and
03:21
you know it’s important to look at right
03:23
because why you get
03:25
with all these things you get more
03:27
people that are looking to buy
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so as i sell or whenever you go to sell
03:30
the builds a lot easier right
03:32
you get more people coming in so that
03:33
means like ben said there’s more demand
03:35
right ultimately it’s a much it’s just a
03:37
better easier experience as an investor
03:40
right yes you can make money in a
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beaumont we’ve made a lot of money in a
03:43
third-party market like a boma
03:45
yes you can make money in detroit right
03:46
in the com place that’s going negative
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it’s not to say one is right one is
03:50
wrong right but it’s ultimately as an
03:52
investor you are looking to
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essentially remove as much risk from an
03:56
equation as you can
03:57
right to put more things in your favor
03:59
because even if you buy that really nice
04:00
deal in a great part of area there’s
04:02
risk things can go wrong right
04:03
but by buying in a nice deal in a nice
04:05
area you’ve removed a lot of that
04:07
intrinsic risk
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and so that’s really the big thing to
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kind of look at here right and
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ultimately i mean we
04:12
we went to atlanta three years ago we’ve
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done very well in atlanta
04:15
why did we go to atlanta it had the
04:17
population growth job growth
04:18
the things that we’re talking about
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diversification they didn’t have the
04:21
right price point is the other piece
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right
04:23
the prices made sense relative to all of
04:25
that and so we were able to ride that
04:27
wave right that market really got hot we
04:29
got a lot of rent growth
04:30
and really done well but now prices are
04:33
really elevated so maybe we’re going to
04:34
make some exits and
04:35
go elsewhere right but you really want
04:36
to look for trends because trends help
04:38
reduce
04:39
risk yeah no that’s it’s the most
04:40
important thing right we’re trying to
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de-risk
04:43
as our friend john montero likes to say
04:45
deals
04:46
right and when you have that that that
04:48
demand on in your
04:49
your area for rents you know
04:52
for rental products you know that’s
04:54
going to take that that
04:56
that piece of the risk out of the
04:57
equation right so some of the other
04:59
things that we’re looking for right and
05:00
a lot of this you’re going to see in
05:02
people’s decks or the brokers are going
05:03
to talk about on their oms
05:05
and so this is not like some earth
05:07
shattering data right but
05:09
these are important and that’s the
05:10
reason why a lot of people talk about it
05:12
right household income
05:13
right you know and what’s the rule of
05:16
thumb here right there’s really not no
05:17
ultimately the higher the better right
05:19
it’s like irr right you know nobody’s
05:21
going to really you know kind of
05:22
get into the intricacies of irr but
05:24
they’re just going to say the higher the
05:25
better
05:26
right depending on what type of investor
05:28
but household income is important right
05:30
because you’re trying to see
05:32
how affluent the area is and right and
05:36
you know if your median if your
05:37
household income is you know
05:39
say 30 grand right you’re gonna cap out
05:42
at how much you can push rents in that
05:43
area right because
05:45
ultimately if you’re doing two two and a
05:47
half three x
05:48
income as your your income requirement
05:51
your property
05:52
right you can essentially back into how
05:54
much you’re going to be able to charge
05:55
somebody before they’re
05:56
essentially going to be in over their
05:57
head in terms of rent right they’re
05:59
going to be housebroke or in this case
06:01
apartment broke
06:02
and that unfortunately in this and this
06:04
economy and this in this market
06:06
um is a big crisis that a lot of people
06:08
aren’t talking about which is
06:09
affordability
06:10
right so you ultimately want the median
06:12
income or household income to be high
06:15
right so you can ultimately fulfill your
06:16
business plan and be able to push rents
06:19
and not get butted up against well is
06:21
this person going to be
06:22
you know house broke or apartment broke
06:23
and then ultimately if they get behind
06:25
like what happened in covid
06:27
right those people don’t have months and
06:29
months worth of backup savings or a
06:31
rainy day fund
06:32
if they get behind one month they’re
06:33
never going to get caught up again and
06:35
it’s unfortunate that
06:36
you know that that’s how it is but it is
06:37
what it is right so
06:39
we typically like to see that you know i
06:42
would say
06:44
we’ve we’ve gone probably as low as
06:45
about 45 right you know but we’re we’re
06:47
buying a deal right now that we’re at
06:49
132. but the deal we did with the 45.
06:52
doing pretty well doing phenomenal yeah
06:54
so i mean take that’s actually a good
06:56
point so i want to put this out right
06:57
don’t say that if one of these doesn’t
06:59
check that box
07:00
then it’s a bad deal right we’re just
07:02
saying you have to look at each one of
07:04
these and then
07:05
ultimately it’s a gut check right the
07:07
you know if maybe it’s
07:08
it’s got it doesn’t have the household
07:10
income but you’re talking about a market
07:11
that’s got job growth and population
07:13
growth
07:14
maybe it’s still a good deal right
07:15
ultimately you need to look at the
07:16
numbers you need to talk to the property
07:17
management company you need to talk with
07:19
you know the people that are familiar
07:21
with that area and ultimately make that
07:22
gut check but
07:23
i don’t want you to feel like you know
07:25
if any one of those is off then oh we’re
07:26
going to scratch the deal right
07:27
especially right now as
07:29
a competitive as it is you need to be
07:31
looking at all deals
07:32
um you know so household income i’d also
07:35
call
07:35
also talk about the the school districts
07:37
that it’s in right you know i mean
07:38
you know how highly rated are they you
07:40
know or
07:41
whatever matters
07:45
you have to kind of build that that
07:46
persona of who your renter is
07:48
yeah are you trying to build a family
07:50
community yeah which we try to do there
07:52
are pros and cons to that yeah
07:53
are you trying to build a young
07:55
millennial community
07:57
again pros and cons but you have to
07:59
understand who that persona is and start
08:01
to tailor to that right yeah and so if
08:03
i’m going for a family i care a lot
08:04
about the school district i care for
08:06
more two and three bedroom units and
08:07
what
08:08
you know a one bedroom right property i
08:10
want to make sure i have some amenities
08:12
versus i’m going something else
08:13
something else right so really
08:14
understand that and
08:15
how the school district plays into that
08:17
how household income placed into that
08:19
right yep
08:19
all of those things help either fit or
08:22
not fit your persona and making sure
08:23
that that aligns with your business plan
08:25
absolutely right you know so i mean i
08:27
think you need to look at that i mean
08:28
we’ve got
08:29
you know families in our communities
08:31
that stay at our properties just because
08:33
the the school districts are good
08:34
right and they’re essentially going to
08:36
pay up to be in that area because they
08:38
want their children to go to good
08:39
schools and that’s nothing wrong with
08:40
that right
08:41
um but that happens and so sometimes
08:44
there might be more demand as an
08:47
investor
08:48
right for that product because it’s in
08:50
that good school district versus say the
08:52
subpar one right so that’s something
08:53
that we look at right once again
08:55
another thing that we just look at not
08:56
the end-all be-all metric folks
08:59
right crime score i think that that’s an
09:01
important thing you know
09:02
and there’s plenty of these on online
09:05
you know
09:06
websites that you can find crime scores
09:07
on once again
09:09
and you can find out if it’s in the hood
09:11
right you probably want to avoid it
09:12
d-class areas we were definitely not
09:14
going to be playing in but you know
09:16
see depending on what type of crime it
09:18
is right maybe it’s going to be
09:20
petty theft or something like that right
09:22
you know but ultimately when
09:24
the less crime the better probably you
09:26
know but once again it’s something that
09:27
you’re going to be looking at
09:29
and people always ask us you know where
09:31
are you getting some of this data
09:32
data from right there’s several places
09:34
right city
09:35
data.com is is a website that we use
09:37
quite a bit and that will show you a lot
09:39
of these
09:40
metrics all in one place it’s free the
09:42
only
09:43
downside of is some of the the data kind
09:45
of lags
09:46
i think a couple years right so things
09:49
might have changed right especially with
09:50
covid and what happened in 2020
09:52
but it’s probably the most you know
09:54
concise
09:56
all-in-one place you know website that’s
09:58
free to access
10:00
um you know it’s all online city dash
10:03
so check that out co-star some of these
10:06
axiometrics
10:07
there sometimes are going to have some
10:09
of that information as well
10:11
so you know ultimately those are paid
10:12
services sometimes a little bit
10:13
expensive so
10:15
take that into consideration if you
10:16
would but those are going to be probably
10:18
the top five that we’re looking for so
10:20
to recap right we’re looking at job
10:21
growth
10:22
we’re looking at population growth we’re
10:24
looking at household income
10:25
we’re looking at the school districts
10:27
and we’re looking at the crime scores
10:28
right
10:29
you know those are probably the five top
10:30
ones now there’s once again there’s
10:32
dozens more so this is not the end all
10:35
black edition
10:36
you’re looking at who the buyer is yeah
10:38
yeah but the neighbors are you’re
10:39
looking at what the rent comps are but
10:40
that’s right those are the main things
10:41
yeah those are those
10:42
these are the main kind of demographics
10:44
yeah when it comes to the
10:45
area right and who’s living there that’s
10:48
the those are probably the main ones
10:50
that we’re looking at right
10:51
you know i would say the other the only
10:53
other one that’s kind of a holistic
10:54
thing is a diversified economy right
10:56
once again we’ve been very uh we did
10:59
very well in beaumont we will
11:01
do very well on our last deal that we’re
11:02
going to sell there too but
11:04
it’s it’s not necessarily a diversified
11:06
economy they’re tied to a couple
11:08
different industries
11:09
and if one of those industries kind of
11:10
starts lagging a little bit you might
11:12
have some problem with the demand
11:14
for your rents right and so whereas say
11:16
houston
11:17
very diversified or a dfw very
11:20
diversified
11:21
right atlanta that’s one of the other
11:22
reasons why we liked atlanta right and
11:24
so it has made
11:25
several major industries and not any one
11:28
of those is necessarily going to go away
11:29
at all
11:30
and even if one of them starts lagging
11:31
you’ve got four or five other big ones
11:33
that are going to continue to drive
11:34
you know growth there and so that’d
11:37
probably be the only other one and
11:38
that’s kind of a more thing
11:39
you just have to kind of study the
11:41
market a little bit talk to brokers talk
11:43
to property management companies
11:44
understand what’s happening in that area
11:46
as far as jobs go and making sure that
11:49
you’re not in a one-trick pony market
11:51
right so i blew through that pretty
11:54
quick man
11:54
that starbucks did a good job all right
11:58
we’re open q and a time so yeah monday
12:00
mondays this every monday 3 30 central
12:03
we basically will spend 15 20 minutes
12:05
going through a different topic we’re
12:06
talking about demographics today
12:08
and really leave the last 10 minutes or
12:10
so to kind of open up q a
12:12
feel free to ask any questions you have
12:13
about you know about demographics
12:16
about real estate about anything else
12:18
about how ben lost his hair
12:19
all of those are fair questions to ask
12:22
oh had to get the ball
12:23
no it’s a pretty open conversation so
12:26
you know
12:27
that’s kind of you know and then maybe
12:28
the other thing i’ll add to
12:31
in addition to demographics really
12:33
understanding
12:34
the pricing because so new york probably
12:37
has really good demographics probably
12:38
has all those things you look for
12:40
but pricing is insane so it doesn’t make
12:42
sense yes
12:43
yes so there’s that last component of
12:46
now great that’s a great area period
12:50
is it a great area to invest in right i
12:52
mean i’m actually going to get some sort
12:53
of return on my profit
12:54
so on my investment yeah i mean you
12:56
could go back to and landlord friendly
12:58
tax friendly all those things too right
13:01
you know um
13:02
if you have comments questions feel free
13:04
to leave them nobody wants to talk about
13:06
demographics come on folks
13:07
no i don’t know what’s going on well we
13:09
were fighting let’s see comments so chat
13:10
said hello ben and ferris hey chat how’s
13:12
it going
13:13
what’s up what else anybody else that’s
13:16
it
13:17
that’s it anybody else oh my gosh all
13:19
right we’re going to keep we’re going to
13:20
keep this thing consistent then
13:21
so let’s see everybody forgot about us
13:24
um let’s keep going
13:25
let’s keep going anyone’s comments
13:26
questions i’ll get to them here all
13:28
right so we’re talking demographics
13:29
today
13:29
ask any questions that you like but we
13:32
want to talk about the ultimate
13:33
houston real estate investing events
13:36
we’re starting back up our meet up
13:37
which is awesome so we have one of the
13:39
biggest if not the biggest multi-family
13:42
meetup in houston usually get 70 to 100
13:44
people
13:45
but we are excited to start it back up
13:47
and start it out with
13:48
a splash splash
13:53
right we’re part of a few other people
13:55
we’re going to make it big we’re excited
13:57
hoping to get 150 people out there yeah
13:59
and so so with
14:00
you here in houston july 1st this
14:03
thursday so be ready
14:04
i almost forgot about it i was going to
14:05
plan something thursday i was like wait
14:07
a second
14:08
and so july how dare you today we’re
14:10
excited to do something with the family
14:12
if you’re in houston or anywhere in
14:13
texas please please come on out
14:15
yeah good time it’s going to be at pitch
14:17
25 at
14:18
6 30 7 o’clock center and give some
14:21
people some dirt that’s over by that’s
14:22
over by the stadium it’s over by george
14:24
brown houston yeah so check it out it’s
14:26
a bigger venue than what people
14:27
are used to we used to go to another
14:29
place called pub fiction this one’s a
14:30
lot bigger but we’re still gonna have
14:32
the mic
14:32
and the screen and we’ll still do
14:33
presentations and have great people come
14:35
out and speak
14:36
and we’ll have that as well right so go
14:37
to disrupt equity.com
14:39
july 1st and that is a one st
14:43
at the end there but uh this is our
14:44
meetup that we’re really excited about
14:46
been doing that for five years yeah it’s
14:48
five years i can’t believe anyone
14:50
wow another five on to another five
14:53
right so
14:54
it wouldn’t be a money monday without
14:55
talking about infin this is our
14:57
conference that is coming up folks miami
14:59
florida
15:00
july 24th if you want a discount code
15:03
pop in disrupt and you’re gonna get 100
15:06
off yeah
15:06
we’re excited it’s gonna be a lot of new
15:08
people so for those of you that know us
15:09
to know our groups
15:10
it’s gonna be a lot of people we don’t
15:11
know so i’m kind of excited about that
15:13
right it’s always good to meet new
15:14
people you never know who you’re gonna
15:15
meet
15:15
yeah we got brian tracy which we’re
15:17
excited about right you know
15:19
for a lot of people that maybe don’t
15:20
know him right he does personal
15:22
sales development been around for many
15:24
many years you know he’s gonna be
15:25
joining us remotely we’re excited about
15:26
that
15:27
we got a lot of great panels and we’re
15:30
gonna do some breakouts
15:31
and more importantly it’s all about
15:33
networking absolutely yeah so we have
15:35
some new changes we’re gonna do yeah
15:36
we’re gonna facilitate that a little bit
15:37
definitely excited but also who doesn’t
15:39
like miami
15:40
so i don’t know right you know and so
15:41
we’ll be hanging out we’re located in
15:42
the united states which is for all of
15:44
you i hope to see you guys there
15:46
yeah um and let’s see so jeff greenberg
15:48
says hello guys
15:49
jeff see you guys good seeing you as
15:51
well if anyone has any comments
15:53
questions please feel free to
15:55
leave them all right so one last thing
15:58
mfinvestornetwork.com
15:59
pop in that coupon code disrupt i
16:01
interrupt you there you did you did you
16:03
did you’re killing me
16:04
but we’re almost sold out just fyi so if
16:06
you are gonna get your ticket
16:08
go ahead and book it now hotels in and
16:10
around that area
16:11
you’re probably gonna have to look for
16:12
the best pr uh price but
16:14
you know we’re being told that those are
16:16
getting booked up pretty quick too
16:18
so best to buy your ticket now plan for
16:20
it
16:21
we’ll people will be around all friday
16:22
all saturday most of us just go home
16:24
sunday but
16:25
i do know some folks that are staying a
16:26
little bit later too absolutely you know
16:28
i mean it is miami so
16:29
there’s a group taking a jet out of
16:30
dallas you’re out there right
16:32
yeah no it’s like a private jet so yeah
16:34
so if you’re in if you’re in the dfw
16:35
area and you let us know we can put you
16:37
in touch with yeah i think they’re
16:38
looking for a last couple guys
16:39
you know good good thinking i forgot
16:40
about that private jet so that’s how
16:42
much people love our conference
16:43
that’s actually kind of cool i was
16:45
thinking actually about driving up there
16:46
and then going out there with them but
16:47
you know we had already booked our
16:48
flights
16:51
work to do here spirit airlines versus a
16:54
private jet i don’t know
16:55
but what are we talking about whenever
16:57
we come back which is not going to be
16:59
next monday but the monday after
17:01
cap rates and multi-family real estate
17:03
so if you don’t know what a cap rate is
17:04
stay tuned it’s important
17:06
definitely no it’s extremely important
17:07
so check that out that’s going to be
17:09
coming up
17:10
not next monday but the monday after so
17:13
and then we’ll be consistent after that
17:15
folks
17:16
really really excited about it but i
17:18
think we’ll go ahead and wrap it’s
17:19
called our app so we’ll see you guys
17:21
next time

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