Rural? Between three towns ~20,000 large in Illinois
They are growing towns and I'm interested in the opportunity the beat down rural/small town properties represent.
I'm looking at about 30 homes - all under 30k. While I know low price is not a decision factor, if a couple of these homes present good deals, I am going to go forward with them because I have a cash buyer.
Does anyone have experience in acquiring small/rural town properties, and, most importantly, successfully marketing these properties?
@Jeremy W. might?
You mentioned that the towns are growing. Are factories coming into the towns or some sort of other business? In order for them to be good candidates in such a small area there needs to be substantial growth coming through. You can them market them as a growing community.
For example in my hometown there is no growth and everyone is moving out at this point. Only people living there are cotton and peanut farmers or the born and raised grandparents. However, at one time years ago a company came in and paid great wages. So the town grew and people moved in. There were no open homes and a couple of builders were able to make some money providing the new construction. This did not last. The town was just too small to support growth, no grocery stores, restaurants, malls, etc. The land was for farming so major development was out of the question.
I shared that to say, are the towns really growing and will they be able to support people moving in? You need someone to occupy those homes, or are you trying to just rent to the locals who are already there?
I think @Brandon Turner is the Rural expert. LOL
It sure can be tough in some regards, but I do like rural investing. The toughest part is finding good contractors to work. Also, plan on having longer vacancies, but people seem to stay longer. Also, I wouldn't plan on prices going up much - so only do it for the cash flow :)
I just bought my first property in a rural area. I am by no means an expert but what I looked for while researching rural properties were the local schools, proximity to larger towns and rental market in the area.
@Tyrus Shivers Absolutely.
The community has solid schools, a good employment foundation w/ a few large companies, but no big, new businesses have come through recently. We may have to rethink our locale. Thank you!
Our exit strategy is to sell it - lease option at last resort - so we will have to consider all of these things.
@Brandon Turner Good point.
We have a solid team (sider, realtor, plumbing, carpenter, attorney, handymen) so we predict we can tackle small distressed homes in 1-2 months. But this is new to me so I know I will learn a ton (especially since its a short sale).
@Ryan Craig Are you rehab/flipping or holding it?
I am holding it. It required very little to rehab to get ready, mainly cosmetic. I haven't learnt enough to start flipping yet but plan on trying that later this year or next.
I'm right on the edge of rural, just how I like it. Its cheap enough that the numbers make sense and close enough to the big city that vacancies are short. There are some cheap apartment complexes 30 or 40 mins south of me but I won't touch them because I think vacancy will be high.
Rural assets. Sure experience. Had scatter sets of assets and a couple of fractured developments.
I really like what @Brandon Turner said and i agree. Do not expect much in appreciation but cash flow could be good.
I would say as far as expectations, everything takes much longer. Marketing times are certainly longer. Heck, just getting calls back takes longer. Small towns can also mean hard to deal with departments. I once had a small town so small, the water department was literally ran from one of the old lady's in town homes on her home phone. Not kidding. This is aside from not much for them was on the internet either and I think their fax machine was from 1982. I always got the impression, there were like 3 people sitting in a room and they were the entirty of administration for the town. I am pretty sure that was darn close to reality.
The good news, they will certainly get to know your name pretty quick if you have a couple of properties and need to get things done with them.
Would I 'load up' in any geographic concentration of small rural properties. No. Not unless the rural town was about to expand into something bigger.
Some of my best deals to date have been in rural and very small town CA. My all in cost was never as high as $30K. I don't have a lot of competition on the seller problem solving side. And usually no shortage of buyers when I'm ready to sell. CA is full of investors looking for properties under $75K.
Pay close attention to the number of homes sold monthly in your ARV price range. If there is 1 every 3 months .. your in for a long ride.
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