Property values decline, but local populations remain high. It is easy to see how population movement and population growth impact the housing market, since a higher population density increases the demand for local real estate.
While commercial real estate can be an excellent investment, it’s all but impossible to succeed in this competitive environment without some sort of game plan. The most successful professional real estate investors are those who are able to look at a given area and accurately predict which parts of a given city are likely to experience the most growth in relation to other areas in or near that city. Those who are able to gauge such trends can enjoy enormous advantages in the real estate investment marketplace.
One of the major advantages of this approach is the investor’s ability to often purchase properties at significant discounts to their future, improved market values. One example of this in urban areas is where some neighborhoods go into decline over a period of years. Property values decline, but local populations remain high. Should the city council decide to “re-zone” or offer incentives to developers to rehabilitate the neighborhood, savvy investors have an opportunity to come in while real estate prices are still “low.” Thus, they can enjoy excellent profits once those blighted neighborhoods begin to turn around.
One of the methods used by these professional real estate investors is a thorough analysis of current and future population trends. Tracking the trends in population growth and population movement can provide an accurate predication of which neighborhoods are likely to succeed and which ones are doomed to at least short term failure.
Over the past several years it has been those markets with the strongest and fastest population growth that have been the hottest markets in the country. This trend has held true both in residential and in commercial real estate, and those investors who took advantage of this fact were able to realize excellent profits through the buying and selling of residential and commercial properties.
It is easy to see how population movement and population growth impact the housing market, since a higher population density increases the demand for local real estate. In turn companies looking to open new facilities or new branches often look to areas with high population growth, causing a spike in commercial real estate prices as well.
The movement of population from one area of the country to another can also be an accurate predictor of when it is time to sell. The nature of the neighborhoods in which investors own property can sometimes be difficult to determine, especially from a distance. So, tracking population trends can be a big help to business owners and owners of commercial real estate around the country.
Whether you are planning to buy commercial property, sell commercial property, or do a little bit of both, paying attention to the growth and movement of the local population can be a huge help. Real estate investors need to be cognizant of the trends which could effect their investments and population growth is one of the most important to track.
Where Have all the Commercial Lenders Gone?
Government Agency guaranteed or sponsored transactions, including: SBA 7(a) and 504, HUD construction loans for multifamily projects, Community Reinvestment Act loans, USDA Business and Industry loans, and to a lesser extent, Fannie Mae and Freddie Mac multifamily loans.Trading Up Using the 1031 Exchange
A powerful method for building real estate holdings is the use of 1031 Exchanges, which lets investors defer capital-gains assessment on investment property.Segregate Costs for Better Cash Flow
While costs such as office equipment and furniture are easily recognizable as personal property, construction-related costs that are often included as part of real property may also qualify.