Investing in a small town

For example, think of small coal towns in PA or in West VA or textile towns in SC. When the industry dried up or changed, those towns did not go away, but the population and the value of the land and buildings went way down?

Doesthe small town that you are looking to buy in have any of the following?
-Close to a bigger town (less than 30 minutes away)
-Have a State University or a real good private University?
-A regional hospital?

If you say yes to one of these, your small town has some staying power. If you say yes to two then you are probably ok. If you say yes to all three, I would start buying all that I can as long as you are buying right!

Good luck, and happy investing.

Edited: 06/26/2010 at 07:48AM

James Hiddle

Real Estate Investor · Altus, Oklahoma

2,567 posts
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Apr 01 '09, 11:27 AM

It's tougher because the inventory is low and sometimes the market can be thin but if the town is in a boom due to new jobs than yeah.

I live in a small town myself and the inventory is very thin but the market is steady some good deals around here.

Edited: 06/26/2010 at 07:48AM

Just Don

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Apr 01 '09, 11:50 AM

Small towns CAN be quirky and closed minded. Course MY definition of a small town is dif than yours. To ME a small town is 1200-1500 people or less. A blink town is like 100-150. Either of those, people can THINK people from the BIG town nearby are rich,dont need the money,and are to be taken advantage of!!!

True small towns there are two different brands of people,to THIER thinking,,,natives and imports!! To cross from the later to the former is QUITE a leap!!!

Small towns are defined as NOT needing your blinkers,,,they all KNOW where your going!!!

Edited: 06/26/2010 at 07:48AM

John C.

Real Estate Investor · Hilton Creek, California

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Apr 01 '09, 02:31 PM

Yes and yes. Small towns are the best, especially living in them. But obviously the majority doesn't see it the same way.

Edited: 06/26/2010 at 07:48AM

Rachel H.

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Apr 01 '09, 05:11 PM

It can work - you just need to look at the demographics. Find out what and/if the needs are of the community. Is there a need for affordable housing? Also, check out the job situation - be careful of towns where one employer is the only employer. I've seen it before where it's hurt other investors if that employer leaves the area. Also, see how far bigger towns are especially those with universities and bigger/more employers. Hope this helps!

Edited: 06/26/2010 at 07:48AM

Jack Fremont

Developer · Frederick, Maryland

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Apr 02 '09, 11:47 PM

It cuts both ways. The advantage of investing in small towns is that you don't have the competition from the "big guys". On the other hand, as suggested above, a small town may be more subjected to a sudden economic jolt (e.g. a Wal-Mart comes to town and now your strip shopping center is half vacant).

There is no universal answer. You can make money anywhere provided you do your homework and know what the values are and then buy properties below value.

Edited: 06/26/2010 at 07:49AM

Josh Layhue

Real Estate Investor · Erie, Pennsylvania

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Apr 03 '09, 12:14 AM

I grew up in and invest in a small town. I think one of the major advantages is the possibility of huge growth. Of course, not every small town has a lot of growth potential, but every metropolitan area started out as a small town at one time or another. As many people mentioned, small towns also present some risk if a few major employers support most of the economy.

Edited: 06/26/2010 at 07:49AM

Franklin Lee

· Virginia

82 posts
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Apr 06 '09, 03:24 PM

Um, the only advantage I can see by investing in a small town is just the local contacts. Other than that, I don't see anything that would influence me to do the same.

You get lower appreciation rates, lower positive cash flows, lower value of the homes, no property managements, no communications with the outside world(which is your prospective tenants), and by the time your small town becomes a metropolitan, your grandchildren will enjoy every investments that you've spent your hard earned money on.

Edited: 06/26/2010 at 07:51AM

Tim W.

Real Estate Investor · Indiana, Indiana

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Apr 06 '09, 03:49 PM

One thing I haven't liked about 10,000 and less towns is that they are usually serviced by 1 major employer....and if some hot shot young executive comes in and decides to outsource the services of that town - there goes your entire portfolio. I find I can get every advantage of a "small" town with town of about 100,000-150,000. With those, there's also plenty of smaller satellite towns around it you can check out.

Edited: 06/26/2010 at 07:51AM

Jim Wineinger

Real Estate Investor · ten mile, Tennessee

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Apr 06 '09, 04:05 PM

Originally posted by Tim Wieneke

One thing I haven't liked about 10,000 and less towns is that they are usually serviced by 1 major employer....and if some hot shot young executive comes in and decides to outsource the services of that town - there goes your entire portfolio. I find I can get every advantage of a "small" town with town of about 100,000-150,000. With those, there's also plenty of smaller satellite towns around it you can check out.

But then again, those who are used to these small towns are used to travel what is necessary to get thier income necessary.

And if you are able to purchase properly (low enough) you can gain a reputation for providing "starter homes" for those youngsters as they move out. They could be as rentals or rent to own or even owner financing which will produce a continuous income which goes along with your growing reputation in that town as the one to come to for your resonably priced homes.

The mindset of the small towns are what you must get past. Once they get to know you (reputation) they will begin to grow on you and you will be able to turn more homes at less profit but which will produce more in the long run. So you must treat those small towns as long term investments to be successful there.

Edited: 06/26/2010 at 07:51AM