Why Should I Purchase a Rental Property in West Palm Beach?
When looking to invest in a city such as West Palm Beach, Florida, the best route of action is to determine if an investment in the area makes sense for you. To do this, you need to look at key statistics surrounding the city and run the numbers against your investment strategy, goals, and desired outcome.
It is highly recommended that you obtain data on key characteristics about the area such as job growth, median income, and population growth from a property management company that is already heavily invested with numerous properties in the region of interest.
Why? Not only is the data going to be updated regularly and accurate, but they are better able to answer questions about trends in West Palm Beach, Florida.
To help you determine if West Palm Beach, Florida is a suitable investment for you, let’s take a look at which characteristics are important.
What Area Characteristics Tell You About A Potential Investment
The data and information you receive about a potential investment region is only good to you if it aligns with your investment strategy.
This is why the first step to determining if a city like West Palm Beach, Florida is a wise investment choice is to look at the characteristics of the area.
- Does the data indicate that there will be a lot of future job growth in the area?
- Is the population growing at a favorable rate or is it shrinking?
- Is there a steady flow of new businesses coming to the area?
- How long do businesses stay in the area on average?
- What kind of jobs are available and what is the median income average?
- How old is the average population?
- What is the current percentage of renters in the city?
- What is the demography of said population? Are they young families, college students, or are they retirees?
- What is the average rental occupancy rate?
By getting the answers to the above questions, you can extrapolate on how much you will be able to rent your property out for, how long tenants will rent the property for, and what the average renter demographic will look like.
Let’s take a look at some key statistics for West Palm Beach, Florida.
Everything You Need to Know About West Palm Beach as an Investor
- Location: West Palm Beach is located along Florida’s Atlantic Ocean coast, immediately west of the adjacent Palm Beach, and is situated on a barrier island across the Lake Worth Lagoon . It is 60.7 miles from Hialeah or 66.1 miles from Miami  and is surrounded by long sandy beaches and vast stretches of wetlands.
- Population: estimated population as of 2020 is 114,508 for West Palm Beach, Florida.
- Average Age: the median age is 39.8, 37.6 for males, and 41.4 for females .
- Population Demography: there is a good mix of some college students, young married families, and some retirees. The majority of the population are high school graduates or have obtained a bachelor’s degree.
- Population Growth Rate: 1.38% in 2020
With the majority of the population at such a young age, there will be a lot of young non-married and married families looking to rent apartments, condominiums, and single-detached homes.
- Unemployment Rate: 8.1 % with 64.6% participating in the labor force .
- Employment Rate: 59.3%
- Job Growth Rate: for non-farm wage and salary employment, the numbers are up from 576.5 in August 2020 to 585.7 in September 2020  as is employment.
- Median Income: this is broken down via household type.
- Married Families: $77,198
- Families: $58,480
- Non-Families: $40,886
- Households: $51,635
Information for this can be found here.
- Education: there are numerous public and private colleges and universities in the area such as Palm Beach Atlantic University, Lynn University, Keiser University, and Florida Career College.
Now that we know a little bit more about the population basics and the economy, it is also important to gather information about the rental prices. You don’t want to be stuck with a vacant property and you certainly want to be able to offer competitive rates. Here is what to look at.
Property Types & Home Prices vs. Rental Rates
You will want to take a look at the average sale prices of homes in the area versus what the rental rates are for similar homes. This will tell you important information about cash flow and appreciation value which can then be cross-examined against occupancy rate and demographics.
When it comes to property types, you want to compare rents across equivalent property types and their relative size. This is because of the rental rate and how competitive you can be is determined by the type of rental.
A single-family home is going to rent more than an apartment or a duplex as the number of available bedrooms and the number of occupancies has a direct impact on what you can charge.
As of July 2019, the median value of owner-occupied housing units for West Palm Beach, Florida, was $237,400 with the median monthly mortgage of $1,661 or $690 without a mortgage.
The percentage of those living in the same house 1 year from their move-in date was 79.8%. Comparatively median gross rent was $1,220 . These numbers have likely increased across the board in 2020.
As of a 2018 5-year study, West Palm Beach saw a relatively even split between those looking to own at 48.2% and those looking to rent at 51.8%.
Those married were more likely to own, whereas those in non-family dynamics were renters across both female and male demographics . Combine this with an increase in annual population and a lower unemployment rate, and West Palm Beach could be a sound investment for investors moving forward.