One of the most common phrases in real estate is “location, location, location.” But what exactly makes for a “good” location? What do you look for in a house hacking market analysis?
Based on data from data scientist turned real estate investor Neal Bawa, there are 6 demographic data points to consider when analyzing a rental market.
Since house hacking is a type of rental, it works for the house hacking strategy as well.
The 6 demographic data points to consider are population growth, income growth, property value growth, crime level, crime change, and job growth.
Each one of these data points has a benchmark or range that I consider “good.” Those benchmarks are:
- Population Growth: 20%
- Income Growth: 30%
- Property Value Growth: 40%
- Crime Level: 500 or less
- Crime Change: 0% or declining
- Job Growth: 1%
For the population growth, income growth, and property value growth benchmarks above, the percentages represent the amount of growth since the year 2000.
For example, if the population of a city in 2000 was 100,000, we’d want to see a population of at least 120,000 by now. It works the same for the other two benchmarks as well.
The crime level and crime change benchmarks are based on City Data‘s Crime Index level.
The job growth benchmark is based on the Department of Numbers job data.
Please keep in mind these benchmarks are just that — benchmarks. They are not set in stone and they absolutely can and will vary.
You might find a great market that doesn’t meet these criteria. Some great markets may meet a few of these benchmarks but not others.
These benchmarks are not absolute, but they do provide a great basis to start your house hack market analysis. The benchmarks also allow you to quickly rule out any cities that are way off the mark.
Once you’ve found the cities you’re interested in buying in, be sure to check out our free house hacking calculator to analyze all your potential deals.
If you want to see these criteria in action in a real city analysis, you can find them below: