Tenants who actually have jobs are far more likely to pay rent than those who don’t…unless you’re renting to Section 8 or retirees. So you don’t have to be a rocket scientist to know that the durability of your rental income will be closely linked to the durability of the local economy.
And while a lot of real estate”investors” have been focused on flipping distressed properties to foreigners and newbies, if you’re a long term buy and hold investor, then finding the right market with the right jobs is job one. After all, if you get a “great deal” on a cheap property in an economically declining market, how bright is your investment’s future?
So how do you know if a local market is attractive (or repulsive!) to businesses and job growth? To find out, we decided to visit with a guy whose full time job is to reach out to businesses and recruit them to move to his city and set up shop.
The voices on this scintillating session on The Real Estate Guys™ radio show:
- Your right on host, Robert Helms
- Your left over co-host, Russell Gray
- The Godfather of Real Estate, Bob Helms
- Special guest, the CEO of the Greater Memphis Chamber of Commerce, John Moore
During a recent trip to Memphis (we were doing some advance work for our upcoming field trip), we had the opportunity to sit down with two representatives from the Chamber of Commerce. We learned so much, we thought you would like to hear about it. So we invited them to call in to the show and tell us about what makes Memphis magic. We must have made a good impression because they gave the job to their CEO!
Even if you aren’t interested in Memphis (cash flow can be SO boring), you can still learn a lot from this episode, which you can then apply to whatever markets you’re in to. (If you have one you really like, use our Feedback page to tell us which one(s) and why. Who knows? Maybe The Real Estate Guys™ will do a field trip to your town?)
So what makes a market place attractive to businesses? We know that a company will move to find a more favorable business climate, but what does that look really look like? And is it really all up to the government, or is there more?
We find out that there are a variety of factors, some of which have to do with taxes and regulation, but many others that have to do with location and who the neighbors are. Sometimes there are important synergies between businesses, so companies will set up shop simply to be near each other. Mr. Moore gives us a couple of great examples. Very interesting!
Of course, as real estate investors, we’re not just interested in jobs for the sake of jobs. Though after the last few years, ANY job looks pretty good!
But real estate investors are looking for areas where there are the kind of jobs that our ideal tenants will need to be able to consistently pay rent. Don’t you like the sound of those words? “Consistently pay rent”… like music to our ears!
So listen in to this episode and learn about some of the things you should be thinking about when scouting out your next long term real estate market!
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