Buying in a random small town far away from home base

6 Replies

What resources do you use when speculating on the future of a town you're investing in?

I found a property in a small town (population of <10k) in Florida. I've never heard of the town and know nothing about it (besides what I can find on Wikipedia and a basic google search), but the property looks promising (it's a mixed use building with 7 small residential units and three store fronts) and the numbers seem to add up when using the BP calculator, even being very conservative. 

Small towns are often small for a reason, but even small town folks need a place to live in and small town businesses need a place to operate from. My fear is that the town is dying and real estate value with it.

Would love to hear some insight!

Thanks in advance.

//Jan

First time investor from Brooklyn.

I would be very careful commercial in small towns can stay vacant for EVER and a Day.

just drive through any small town between Dallas and New mexico.. look down the main street.. nice brick buildings 90% vacant then on the outskirts of town a walmart and the associated fast food joints..

the resi might work.. and maybe you change the commerical to cheap storage but put NO value in its cash flow would be my advice unless there is some compelling reason you think those would be leased.. if there was demand they would not be vacant would be my thought

Thanks @Jay Hinrichs ! Makes perfect sense! 

Do you have a minimum size for a city you're investing in? E.g. not investing in any city with a population that's <50.000? Is this something to consider in a strategy, or would you say it really is case-by-case? 

My wife's tiny little home town in West Texas suddenly got a big boost as they found a bunch of oil nearby the other year and suddenly all bets were off. The town flooded with oil workers who all needed a place to stay. Needless to say, anyone who owned RE was pretty happy.

You could look at cities and towns to see the budget is shrinking or growing, and crime on the rise or falling, rioting going on or not, business moving in or out, these are good indicators of whether things are healthy or soon to be in decay. This is not size dependent at all, we have seen big cities and small towns go in the toilet and more will follow, while others will prosper. 

Hey whaddu' you say we talk about the Stanley Cup finals for a bit? This other stuff is just way too scary!

Jan the best advice I can give you is to do some decent research on who your property management company would be. Which companies cover that area. Interview them extensively.  Check their Yelp reviews. (Owner's reviews not Tenant reviews)  Ask the PM company for references. 

We had units in Texas... Our home base is in California.  We ended up selling the units after a few years because we could not connect with a PM company that could meet our needs.  The blame lies solely with us for researching everything but who would be watching these units for us. 

Best of luck Sir 

I think I’d Do some research on jobs in the area . If the biggest employer in town is Burger King then don’t buy there ! I would physically visit the location and see what kind of figures your seeing with local rents and what job outlook / unemployment is in the area . This way your not guessing on the future . Everything looks good online or on paper so you need to visually see where your parking your money imho