House Hold Income & Family Income

What is the difference between House Hold Income and Family Income and why is it even interesting?

When considering investing in an investment property, the first and most important thing to do, even before an economic examination of the transaction, is to understand the quality of the area, the socio-economic level of the population living in the property environment, the housing demand in the property environment and more. When talking about the socio-economic level of the population, there are two very interesting metrics:
- House Hold Income
- Family Income

What does it mean, what is the difference between them, and why is it important ???
One of the main parameters that predict the success and level of confidence in investing in a rental property is the level of income of the population living in the property area. A family with a monthly income of 2,000 $ or even 3,000 $ will find it difficult at some point to pay their monthly rent, even if it is not high. Enough that month, there was car care, expensive dental care for one of the children, or anything else, and the first thing that would hurt would be rent.

The US Bureau of Statistics publishes very detailed information every few years, and at very high resolution (sometimes even at street level), data on the socio-economic cut of the population. So what exactly should be checked?

House Hold Income
This is basically household income. ZA, that if a student who does not work, or part-time, is supported by his parents, and rents an apartment, he will enter this statistic.

Family Income
This is actually the income of a family unit, and usually more relevant when examining an asset that is intended for a family, since it relates to income by family unit (a pair of parents + children) and better represents the state of the population in the area.

In areas with a high percentage of single-parent families, high unemployment rates, singles, or adults living alone, these two parameters will be closer to each other.

In mixed areas, where on the one hand there are houses with 3-4 bedrooms, which are populated by families with a pair of parents working at a handsome salary, low unemployment and poverty rates, and on the other hand one or two bedroom houses which are mostly occupied by bachelors / If the asset we are looking at is an asset for families, it is better to look at Family Income and make sure it is high enough so that a family living in your property will have no problem paying the monthly rent.

My recommendation is not to deal with assets in areas where families enter less than $ 60,000 per year, so you will reduce the risk of your investment and know that you are investing in a property with a high level of confidence, a property that will actually yield the same as expected return, and you will not have to deal with eviction and financial losses each year Great.