Real Estate Investing: An Introduction to Market Analysis

By Patrick Leblanc

Article Word Count: 273

How do you know what’s a good market for multifamily investing? How do you know what market cycle a market is in?

Buying apartment buildings is like buying any other product. Prices are a result of supply and demand. With apartment buildings you need to analyze the supply of and demand for both the rental of the apartments and the supply of and demand for the apartment buildings for sale.


What variables impact the supply and demand of rental units?
New rental properties being constructed.
Changes in number of jobs and resulting changes in population.
The type of jobs present in a market and a family’s average income.
Rental units being taken off the rental market (i.e. condo conversions.)
Number of vacant rentals and changes in the rental vacancy rate.
The cost of entry-level single-family houses.


What variables impact the supply and demand of apartment buildings for sale?
New rental properties being constructed.
Rental units being taken off the rental market (i.e. condo conversions.)
Interest rates and the relative health of the stock market.
Favorable press for a market and last year’s market appreciation.


What other factors are present?
What is the government doing to affect economic development and the quality of life?
What is the ratio of rental income to apartment cost and what are the average apartment rental expenses?

What are good sources of this information?

www.City-Data.com
www.ofheo.gov/HPI.asp (Office of Federal Housing Oversight - House Price Index)
www.huduser.org/datasets/fmr.html (HUD-Fair Market Rents)
www.chamberofcommerce.com (Local Chamber of Commerce Directory)

Patrick Leblanc is the president of Reflex Investors Inc. and has been investing in real estate since 1991. Reflex Investors buys multifamily properties by offering investors a fixed 10% return in private mortgage notes. Patrick can be reached at http://www.Reflex-Investors.com and http://www.Solid-Return.com.