Local Economic Analysis


Now that we have isolated a specific zip code, we can begin researching the specific location in order to begin formulating an investment thesis for the specific zip code. We are looking for key value drivers, such as:

  • Local government budget (the area we can focus on is Marietta, GA)
  • Job growth
  • Household income
  • Types of occupations
  • Tax rates


To find some additional information, I went to Bestplaces.net to acquire additional job and demographic information. While some of the earlier sources we utilized also have similar information, I wanted to present another website with some additional job growth forecast information as well. On the website, we can type in the zip code circled here:

Bestplaces.net splash.png

Typing in the zip code “30067” takes us to the following website, with a summary of Marietta, GA. We can select the “Economics” link on the left to take us to the local economics summary.

Bestplaces.net second page.png

Using the data, I first note the future job growth of 36.0% versus 36.1% for the US economy. In general, Marietta seems to be reflective of the median (or slightly less) of the general economy. In order to drill down on an investment thesis, we need to look at some of the information pertaining to the individuals that currently live there. First, we compared the general income ranges for the Marietta population versus the US population:

Comparison of Income.png

As we can see, Marietta’s population is more allocated to income earners below $50,000 per year. This is seen as a positive since we are looking for potential renters rather than buyers. We will research how to find attractive properties for these specific populations in the relevant zip codes at a later date. Now, lets focus on getting a more complete picture. I reviewed the types of occupations in the zip code and highlighted the top 3:


About half of the population focuses in these three areas. Later on, I will look for information related to where these individuals work, travel time to work, and whether there are more jobs opening in these areas.

Now, in order to look for more information about potential home price appreciation, I like to review Zillow home prices & values information to get an idea of how the market is looking at the zip code. Thankfully, it looks like our screening has come through based on Zillow’s predictions. While I would not consider research done at this point, the following from Zillow validates a lot of our work so far:


One thing that immediately concerns me, however, is that prices have increased about 8.3% over the last year. I may have missed the opportunity to invest or find a good deal. However, the market seems to have an upward trajectory for the time being.


We have found some additional facts to consider for our due diligence, and our nearing the process of actually focusing on finding specific deals. For the next lesson or two, we will focus on the local government and finding any indicators we can to hang our hat on. A lot of the websites out there report general information, we are looking to validate market trends. These next steps will require a bit more rigor as the processes cannot be automated like before.

Screening for Residential Real Estate Investment Opportunities – Part 2


In my last post about Screening for Investment Opportunities, I discussed a zip-code approach utilizing IRS data trends for the past few years. Looking at the same geography, I wanted to post another method to quickly compare different zip codes by using current, demographic information.

Zip Code Level Data via Moving.Com

Many websites focused on various aspects of people moving will offer information services so people rely on them as a one stop shop. One particular website – Moving.com – provides easy-to-access demographic information for zip codes across the US. Clicking the link above will take you to a screen shown below:

Moving.Com image - 1

As shown above, you can type in the zip code and click “Get Report” to access the information below:

Moving.Com image - 2

While this is just a snapshot of the detailed information, the different sections presented include:

  • Demographics
  • Income and Jobs
  • Ethnicity
  • Education
  • Climate
  • Crime
  • Residential

I used various data points from these pages across the same zip codes used in my previous post. I compared the data to National figures and the median of the selected zip codes as the benchmark and came up with the following screen below. The “Value” column aggregates the number of times each zip code ‘outperformed’ the national benchmark and the median of the zip codes (a total of 2 points for each factor). While this method is very generic, potential investors may feel the need to experiment with their weighting schedule if they feel certain factors are more important than others. Weight based on your gut instinct, if you don’t know how important something is… research it.

I utilized the same tranches as before: (1) Green – High Growth, (2) Yellow – Potential Growth, and (3) Red – Low Growth.

First set of factors:

Analysis - 1

The second set of factors and the value for each zip code are below. Keep in mind, the specific zip code will of course not “outperform” the national index when it comes to factors such as Homes Owned and the number of Graduate degrees (above). Using my formula, the same logic would be applied to all of the zip codes, so we can ignore the impact of this hole in the analysis.

Analysis 2

For comparability, we can look at the map to see where the zip codes lay:

Map of GA

Now that we have two data sets of analysis for the zip codes I am interested in, I can begin to dive deeper by focusing on what type of risk do I want to take, what is my investment horizon, what are the trade-offs between these zip codes, what sort of return am I looking for (note that the return question comes after your risk management questions), etc. We can also compare the analysis from the IRS data we analyzed earlier to see the overlap between the two data sets.


Now that we have looked at the overall trends, we see there are certainly some zip codes that have historically outperformed others. As always in finance, you have to remember that the past is no indication of the future. The next step in the analysis that we will explore over the next couple of posts focuses on risk management techniques.

Screening for Residential Real Estate Investment Opportunities


The first step in any search for investing is to screen the prospective properties to invest in. An immediate impulse is to jump to Trulia or Craigslist in order to find potential opportunities, ignoring the trends for the specific property. The first objective in locating a suitable investment involves actively screening for areas by finding key trends, including:

  • Increasing home values
  • Stability in value
  • Low crime
  • Good schools
  • The right tenants

While this list is certainly not exhaustive, the purpose of screening is to find general areas that make sense, before you jump in to locate the best deals.

Zip Code Level Data via the IRS

One potential way to search for certain trends is to utilize IRS data on a zip code level. The IRS collects and distributes certain data points collected from everyone’s tax returns. Click here to access the website.

Once you click the link above, you will be directed to the following page, you can locate the tax year(s) you wish to use in your analysis:

IRS Website.png

As you can see, the data is only available through 2013, so the analysis will not be as up-to-date as we would like it to be. However, the data allows us to gain a sneak peak into such factors as:

  • Tax revenue growth
  • Unemployment trends
  • Salary/Wage growth
  • Business income
  • Dependents

Each of these factors can be compared to general rates in the state of Georgia (per my example below). For example, a recent search I performed was focused on finding potential zip codes to focus on in north Atlanta. Here is the map I focused on (created with ZipMap.Net):

Map of GA.png

I decided to look back for a period of 5 years to see the growth of each of the zip codes since the bottom of the Great Recession in 2008-2009. I downloaded the information, created a small model for myself to look at the 4-year change through 2013 for a number of different factors listed below (I have used a couple of acronyms, feel free to ask if you cannot decipher any of the data points). The zip code “00000” corresponds to all of GA:

Data Set 1Data Set 2

While there is certainly additional information I could have included, this is a quick way to see potential opportunities before diving in deeper. With the data, I looked at each of the respective zip codes versus the state of GA and calculated the number of times each zip code outperformed the state as a whole (using a simple binary system illustrated below). After, I separated the zip codes into three tranches: (1) Green – High Growth, (2) Yellow – Potential Growth, and (3) Red – Low Growth.

Summary of Findings.png

From here, I have a list of potential zip codes I can focus on, instead of blindly looking for deals. Of course, we want to drill down a bit further once we have refined our focus. Follow me on this blog and I will explore different points of analysis that we can incorporate.


The IRS data can be a powerful source of data to locate trends within zip codes. It helps to find investments by locating increasing tax revenues in certain jurisdictions, information about the jobs and businesses in certain areas, and the type of people moving in versus moving out (i.e., increasing SSI benefits may indicate more retirees moving in and more stable sources of potential investment income). The trick is finding the data and revealing the story that is screaming out at you.