July 30, 2021

2020 Census Data and Real Estate Investing

What is the most important thing to look for in an investment property? Thousands of classes, experts, and even cartoons have hypnotized us with the mantra: location, location, location. However, that just begs the question. What exactly is it about a specific location that will be indicative of investment success? This is an important question for Self Directed IRA investors. Most private retirement investors can only get into a few properties, which means the predicted success of those properties is essential.  

The truth is that there are a number of location-related factors that can be used to gauge potential profitability. One of the most relevant ones is population growth. Is the area growing and is it being developed? If the answers to these questions are “yes”, then you can safely assume that the burgeoning population will need places to live. As a Self Directed IRA investor, where can you access this information? 

For large national trends, one of the best places to start is the National Census data. The National Census provides a trove of usual information that can help inform your Self Directed IRA investing. For our interest – locations with growing populations – we can look at the page that deals with Percent Change in Resident Population.  The Percent Change is a good indicator if people are moving into the area. Similarly, a negative or very low Percent Change would mean that people are moving out of that area. Let’s take a look at the top 5 for each. 

State + Growth State -Growth 
Utah 18.4% Puerto Rico -11.8% 
Idaho 17.3% West Virginia -3.2% 
Texas 15.9% Mississippi -0.2% 
North Dakota 15.8% Illinois -0.1% 
Nevada 15.0% Connecticut 0.9% 

Once you have these numbers, you can start digging deeper into what they mean. The most basic question is “why?” Why did these states experience such great growth? Did they see new development of industry? Did they become a mecca for a certain kind of business? Did the climate or social elements drive a certain population range to relocate there? Similar questions can be asked for those with negative growth. Did real estate become too expensive? Were jobs lost in that state? Did Covid play a greater role there than elsewhere? Did an exceptional weather event have an outsized response? 

Once you get the answers for the overall picture, it’s time to start digging locally. In the specific area that you want to invest in, is the population growing? Is there infrastructure that can support it? Are schools a draw? Are there nearby places of employment? You might be able to find some of this data online via local government or real estate groups. However, at this level, personal input can go a long way. Local real estate agents will have a pretty good sense of specific neighborhoods and the trends they are experiencing. Make friends, gift a donut here and there, and do the research that can maximize your success. Remember, this is for the profit of your Self Directed IRA. The more quality information you can add to the decision-making process, the better off you’ll be. 

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