Another Due Diligence item to check.
What is the new product delivery coming to the market? In the residential space as well as the rental product. Will the new product being delivered put a burden on the existing stock in the market? Another metric to evaluate is the population and income, Will the new product be priced at a point that will put pressure on the lower price product?
The last trap I look into is the economic development in a market as well as the sub-market. Every city has an economic development department. Go in and look at the cities 5,10, 20 plans. See if your property is in the path of development. I purchased a property in a tertiary market in the middle of a cornfield once because they were building a Super Walmart directly across the street. I know this would create 1,500 jobs and pick up a large amount of tax burden from the property I owned. This turned out to be one of the best properties I owned from a cash flow perspective.
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