There is so much to know when deciding to join the realm of landlordship. How do you get started? What are the landlord/resident laws? How profitable will it be? How do you find renters?
For those considering to become landlords of several units, it’s helpful to know the demographics, or statistical data, of people in a given area. For a general knowledge of the area you are considering, you can look up this information on US Census records, which is free! The data we will be looking at is provided on a nation, state, county, and city level.
New York CityAustin, TXKuna, IDBloomington, IN
Population estimates 8,491,079 811,458 16,999 83,322
Population percent change 3.9% 12.5% 11.6% 3.8%
Persons under 18 years 21.6% 22.2% 37.7% 11.4%
Persons 65 years and over 12.1% 7% 4.4% 7.9%
Owner-occupied housing unit rate 31.9% 44.8% 83.2% 34.3%
Median gross rent $1,234 $1,012 $1,016 $798
Living in same house 1 year ago 89% 74.3% 92.9% 54.4%
Median household income $52,737 $55,216 $56,533 $28,660
Population per square mile 27,012.5 2653 841.5 3472
US Census Bureau, 2010-2014
What to Look For and How to Read the Data
When you pull up the QuickFacts for a place, there is a long list of demographic data you can look at. I’ve pulled the data for four different cities and the information I feel is most pertinent for a landlord to look at. New York City is a place we all know has a lot of renters. Austin, Texas has seen a lot of growth over the last few years. Kuna, Idaho is a small town. Bloomington, Indiana is a college town.
Knowing the population and density is helpful because the more populous and dense a place is, the higher a need for rentals. You will want to find an area with positive job growth and a low unemployment rate. Census records do not show this, but looking at the population percent change can give you a hint. If the population is growing, there is a chance the job market is growing and few people are facing unemployment. For a more sure read, google ‘unemployment rate __’ and it will pull up the number for you. Austin has the highest population percent change on our table and as of April 2015 had an unemployment rate of 2.6%. New York City has one of the lowest population percent changes and it’s unemployment rate is 6.1%.
Knowing the breakup of ages will help you know what generation group you will be dealing with. Kuna has the highest percentage of persons under 18, so likely has a high percentage of families. New York City has the highest percentage of those over 65, so if you’re looking to rent to an older generation, this would be a better bet of the four. Bloomington doesn’t have a significant percentage of either, which fits its college-town profile.
Want to know what percentage of people rent? Look at the owner-occupied housing unit rate. The lower the ownership rate, the higher the renting rate would be. New York City has a low ownership rate - big surprise. Bloomington also has a low rate since college students are not buying houses while going to school. As for Kuna, the ownership rate is high at 83.2% which is above the national average of 65%. Residents of Kuna probably aren’t looking for a lot of rental options.
Knowing the median income juxtaposed against the cost of living can help you know what the area can afford. New York City has a decent median income but the highest median gross rent of the four cities we are looking at. You want to keep your rental rates competitive in order to make a profit off of your property, but in New York City, their budgets look like they are a bit tighter than those living in Austin or Kuna since those in New York have a higher cost of living for a slightly lower income. The college students in Bloomington are obviously poor and have a lower rent rate that reflects this.
Another piece of data you can look at is the percentage of population still living in the same place one year later. This can help you know how often people are moving. Students in Bloomington look like they’re moving more than everyone else. The house owners in Kuna are staying put.
So what’s our conclusion about all of this? Austin, Texas would be the best place to make an investment in rental properties. It has a growing population, a growing job market, low unemployment, a population that both rents and owns, and makes enough money for you to make a profit without breaking their banks.
No, looking at this data isn’t the be-all-end-all of what the renting market is like for these areas. The data is more helpful and specific as you look at even smaller geographic areas, like comparing Queens to Brooklyn. Plus there are other factors to consider as well. The city data we’ve looked at merely gives clues into what you will be dealing with. Once you have an idea of the demographics of an area, go further and ask landlords and renters what their experience has been.
