Rural Properties, Specifically Midwest

4 Replies

New to the mindset change, happy to be on a better long term path. I've begun saving my down payment for first property. 

I currently live in the St. Louis area, and while there are some markets that I think could make decent return through my research, I wouldn't have saved the down payment for another year or so. 

However, I'm originally from Southern Missouri, and still go down to visit my father and some friends. Houses down in this area are almost given away if they need work it seems when compared to the city. And when I say Rural, I don't mean only house on the street kind or Rural, I mean small towns of 10,000 or so. 

My ask is for advice or things to look for in rural investing when compared to an urban environment. I know the abundance of land means no appreciation, but I'm looking for cash flow anyway. 

Thanks to everyone ahead of time!

I can definitely see the allure of cheap properties in smaller town Missouri. There are definite advantages and disadvantages. Many small towns rely on few employers, so you're at risk of population (demand) drying up if jobs move away. However, you can probably scale quickly, at least in terms of # of units, and become a relatively big fish in a small pond if you can put the capital together or do enough BRRRRs. If you put out a good product and word goes around (as it does in small towns) that you're an A+ operator, I think you could have a reliable stream of renters.

Seems like the key would be to choose a small town with multiple employers and/or in the path of progress. Out where you are, O'Fallon and Wentzville etc. used to be one stoplight small towns and now they just grow and grow as you head west. Maybe look for towns in southern MO with similar characteristics that are close enough to the bigger towns down there like St. Gen or Desoto or close enough to Arnold/south St. Louis that people could commute.

Once you pick a city/town, then I think it would be a matter of sticking to your numbers so if you see zero or even negative appreciation, your cash flow will be so good that it won't matter over time. I definitely wouldn't want to get overleveraged in a small town because there would be almost no other buyers to bail you out if you had to firesale. 

Psssst, don't tell anybody but Fenton/Arnold is growing. There are a lot of pleasant, small towns around there like Imperial, Hillsboro, Barnhart, Pevely, Festus, High Ridge and House Springs. There's a new WalMart in High Ridge for goodness sakes. People don't mind a commute if they can kick back and relax after work and on the weekends but there are employers showing up here too!

But don't tell anybody.

Getting over leveraged is a good point. Houses in small towns don't have a very big market of buyers. I guess sticking to a threshold of where the numbers would have to be is key.

And thanks for the info Vince. I grew up closer to Farmington though, so that's where I feel like I could have a team in place. 

Having grown up in a small town in the Midwest and then moving away, I would not want to own there but I do know some people make it work.

Where I grew up there are a lot of small towns (mine was 12k) near larger city centers (250k) so most people would just commute.

If you’re a small town that’s a ways from anything larger I would not do that, but that’s just me