Buying in rural areas

[Scott H.]

Can it be profitable to buy old fixer uppers in small rural town to fix and flip or fix and rent? I am guessing not because most of the towns I have seen, the population is decreasing, but people still need affordable places to live, right?

[Matt Smith]

The only bad side I've experienced is selling, and/or refinancing. My rural holdings would not pass the BRRR test in terms of being able to refi. Creative real estate investing doesn't sit well with the local banks, or the big banks for that matter. I think it's because of the lower population, lower demand, and inconsistant comparables. But for Long Term Holding? That's the way to go. All of my holdings are sub-$100k purchases. One property rents on average for $2500+ a month on a NN lease, and the taxes and debt service (seller finance deal) are so low, I'm still keeping $1700+/mo. Because its commercial, rental income factors in to the value. I doubt I'd be able to sell for $180k today, with rents at $3k. I know this because I've advertised it for sale around that price range recently with no interest. My guess is that it's rural, and therefore obscure to investors, and to the locals who say the price is too high. This is why I do commercial. I have never seen anything that comes close to these numbers in the bigger cities in Texas...commercial, or residential. As for my wife...she was definitely not on board with me taking on seller finance debt to buy a warehouse, until it leased for $3k/mo a few short months later. She also wasn't on board with my plan to acquire multiple properties with enough surplus positive cash flow to exceed both of our previous full time jobs. She doens't criticize the concept too much these days.