I live in a suburb of Rochester, New York , which is the third largest city in New York State\u00a0(behind New York City and Buffalo). \u00a0When I meet other investors, their first assumption is that my investments are in Rochester. \u00a0The fact is, I don’t own any investment property in Rochester. \u00a0All of my investments are in small towns about an hour away from Rochester (populations of ~3,600). \u00a0The next question that I typically get asked is “why don’t you invest in Rochester?”<\/p>\n
There are probably a ton of reasons why people would choose to invest in rural markets<\/a>. \u00a0Below are some of mine.<\/p>\n I as born and raised in one of the towns that I invest in. \u00a0As a result, I spent 18 years of my life there. \u00a0I know every street. \u00a0I have been in many of the houses as the people living their were friends and family. \u00a0I understand the economics, trends and where the jobs are. \u00a0I relocated to Rochester after college and as a result it would be much more difficult to learn a market here as well as I know where I grew up.<\/p>\n There are only a few “serious” investors in the areas that invest in. \u00a0This means that people I talk to typically have not received marketing pieces from 4 other investors and I do not have to work as hard to find a deal. \u00a0In some cases, deals find me because I am one of the few investors in the area.<\/p>\n The average property value in my market is $73,000. \u00a0There are a lot of properties that are less expensive than this. \u00a0My first deal was $26,000 and I was able to scrape the money together to purchase it from saving and selling some stocks.<\/p>\n I am able to find properties that cashflow well. \u00a0I attribute a lot of this to the two previous points (less competition and cheaper properties). \u00a0I can often find properties that generate more that $100\/unit and exceed the 2% rule.<\/p>\n Because the market is small and there is less competition, it is much easier to build a brand. \u00a0People in my market recognize our signs and logo. \u00a0Since we now have the reputation of providing nicer rental properties, we often have a much easier time getting a unit rented.<\/p>\n Because the population is smaller, we can have a larger impact on the community with our investments. \u00a0We have taken several vacant properties and renovated them. \u00a0This not only improves the visual appeal, but it also increases the local tax base and provides more quality housing in the community.<\/p>\n My business consists of a partnership between my father and I. \u00a0I focus on many of the business aspects (acquisitions, accounting, marketing). \u00a0My father focuses on the renovations and maintenance of our properties. \u00a0He lives in the rural area that we invest in. \u00a0As a result, he often drives by our properties and keeps an eye on them. \u00a0If we have a maintenance request, he can take care of it without traveling far. \u00a0He is aware of local conditions, changes and opportunities.<\/p>\n Although there are many benefits of investing in rural markets, there are also several potential drawbacks to be aware of.<\/p>\n Rural areas have less people than urban areas. \u00a0So when trying to sell or rent a house, you will have a smaller pool of customers. \u00a0This could mean more days on the market or more lost rent because vacancies are harder to fill.<\/p>\n There are a lot of strategies for investing in real estate. \u00a0Some strategies may work well in a rural setting (ex. buy-and-hold) while others may be less effective (ex. wholesaling). \u00a0It is important to understand what type of investing make sense in rural areas. \u00a0Even if an investing strategy works, aspects of a business may not. \u00a0For example, marketing on Craigslist may be effective in an urban setting but much less effective in a rural area.<\/p>\nFamiliarity with the Area<\/h3>\n
Less Competition<\/h3>\n
Properties are Less Expensive<\/h3>\n
Good Cashflow<\/h3>\n
Less Urban Issues<\/h3>\n
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Easier to Build a Brand<\/h3>\n
Bigger Impact<\/h3>\n
It Works For Our Business<\/h3>\n
Drawbacks\u00a0of Investing in Rural Markets<\/h2>\n
Smaller Customer Pool<\/h3>\n
Some Strategies are Less Effective<\/h3>\n
Lack of Support Businesses<\/h3>\n