Check Out Local Employment Trends before Buying Properties
Whether you’re planning to invest in single-family homes, apartment houses, or retail or office space, you need to understand local employment conditions and trends. After all, you want to be able to sell or rent your properties to people who are employed. If you’re looking at properties in an area where hundreds of companies are operating successfully, you have some protection against layoffs, plant closings, and other problems. But even in regions that are home to many thriving businesses, you would still be wise to take these steps:
- If you are buying an apartment house or other rental property, look at the lease applications of tenants who are currently living in the building. Make note of the names of the companies where they are employed. Are those companies major employers in the area? Are they doing well, or in trouble? Reading local newspapers can alert you to problems. Also consider asking your attorney for the names of local businesses that have filed for bankruptcy.
- If you are looking at commercial or retail properties, what do regional employment trends tell you about your chances of finding stable tenants? Find out who have past tenants have been in the properties you are considering. If they didn’t rent for long, what kind of businesses were they? Look for bigger trends too. If you are looking at a shopping center where several upscale stores closed during the last few years, that tells you something about the economic health of the region.
- If you discover a slump,think realistically about whether it is likely to turn around soon. Even though slow economic times cause property prices to fall and create buying opportunities, be cautious. Also avoid looking at “false” comparables. If a seller tells you that you are looking at a property that would have sold for a much higher price only a few years ago, there is a reason for that. And that reason could mean that a property that you are considering is not really a bargain at all.
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