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  Category: Articles » Finance » Real Estate » Article
 

Commercial Real Estate: The Importance of Population Trends




By Craig Higdon

While commercial real estate can be an excellent investment, it's all but impossible to succeed in this competitive environment without some sort of game plan. The most successful professional real estate investors are those who are able to look at a given area and accurately predict which parts of a given city are likely to experience the most growth in relation to other areas in or near that city. Those who are able to gauge such trends can enjoy enormous advantages in the real estate investment marketplace.

One of the major advantages of this approach is the investor's ability to often purchase properties at significant discounts to their future, improved market values. One example of this in urban areas is where some neighborhoods go into decline over a period of years. Property values decline, but local populations remain high. Should the city council decide to "re-zone" or offer incentives to developers to rehabilitate the neighborhood, savvy investors have an opportunity to come in while real estate prices are still "low." Thus, they can enjoy excellent profits once those blighted neighborhoods begin to turn around.

One of the methods used by these professional real estate investors is a thorough analysis of current and future population trends. Tracking the trends in population growth and population movement can provide an accurate predication of which neighborhoods are likely to succeed and which ones are doomed to at least short term failure.

Over the past several years it has been those markets with the strongest and fastest population growth that have been the hottest markets in the country. This trend has held true both in residential and in commercial real estate, and those investors who took advantage of this fact were able to realize excellent profits through the buying and selling of residential and commercial properties.

It is easy to see how population movement and population growth impact the housing market, since a higher population density increases the demand for local real estate. In turn companies looking to open new facilities or new branches often look to areas with high population growth, causing a spike in commercial real estate prices as well.

The movement of population from one area of the country to another can also be an accurate predictor of when it is time to sell. The nature of the neighborhoods in which investors own property can sometimes be difficult to determine, especially from a distance. So, tracking population trends can be a big help to business owners and owners of commercial real estate around the country.

Whether you are planning to buy commercial property, sell commercial property, or do a little bit of both, paying attention to the growth and movement of the local population can be a huge help. Real estate investors need to be cognizant of the trends which could effect their investments and population growth is one of the most important to track.
 
 
About the Author
WANT TO USE THIS ARTICLE IN YOUR E-ZINE OR WEB SITE? You can, as long as you include this complete blurb with it: Craig Higdon, "The Investment Property Insider," works as a commercial mortgage broker. He publishes the weekly "Investment Property Insider" e-zine (www.InvestmentPropertyInsider.com). Sign up now and get a complimentary report on commercial financing techniques.

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  Some other articles by Craig Higdon
Effective Real Estate Strategies for Slow Markets
Speeding Commercial Real Estate Sales in Slow Markets Effectively building commercial real estate wealth requires the ability to spot a great bargain and the ability to sell that property well, no matter what ...

How to Purchase Underperforming Properties with Construction Loans
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Commercial Real Estate Syndication: Controlling the Property
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Apartment Loans: Common Multifamily Misconceptions
I had the opportunity this past week to answer a number of questions about apartments. I find a great deal of misinformation out there concerning the financing of this excellent ...

Commercial Real Estate Syndication: Property Selection and Purchase, Part 2
We've been discussing the process of assembling groups of investors for the purpose of acquiring income producing commercial real estate. The first part of this article can be found at www.InvesmentPropertyInsider.com/?p=97. We'll assume for ...

Commercial Real Estate Syndication: Property Selection and Purchase, Part 1
Let's assume that you've decided to start assembling groups of investors to buy investment real estate. If you followed my Roadmap of a successful syndication in my previous articles (Part 1 and Part 2), then you ...

  
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