Brad Fischer, our sales person for Dex, asked how the economy is affecting our business. And as I thought about this, residential real estate investors prefer a different economic climate that most business owners. As an investor, you want the market to resemble:
- High interest rate environment – landlords compete with house payments. The higher our competitors cost the more we can charge in rents.
- Tight lending standards. If it is hard for people to borrow money, they are more likely to rent.
- Less new construction of apartments. All business is supply and demand. The lower the supply, no matter how small, the less competition you have.
- Big employment growth/low unemployment
- Net population increase. The more people looking to rent the better.
- High foreclosure rate. People have to live somewhere. It’s not as if the demand for housing goes away
- The last one is hard to measure. But it is really good for our business if families do not live together. Say a family has 5 adult children and they all live at home. This is hard to measure but it is better for our business if they all have separate living units.
