How rural is too rural for investing?

Question

Simple question honestly, how rural is too rural to invest. I live in a town of 602 (I commute for work) we have a town of 10k  9 miles west and a town of 5k 20 miles east. 100k+ populations are 80 miles either way.  Thank you everyone.

David Luetkemeyer · Answer

Tony,

I have over 70 properties in rural OK (towns from 1000 to 5000+) and I can tell you from my experience the cash flow is awesome.    I can buy homes from 15k to 70k and rent them from $450 to $1000.

The biggest problem with investing in rural towns is the exit strategy.  I cant sell these homes in these small towns.  The only way I can sell them is to owner finance or rent to own.

So consider that when investing in rural towns.  You may be stuck holding houses for a long time.  And that's OK as long as they are cash flowing.  But its definitely a great cash flow strategy.

Jeff Filali · Answer

@Tony Whitaker I invest in rural Oklahoma towns a lot. I own several properties in towns with populations between 500-5,000. Like you said, if oil is up, towns are booming, oil goes down, town dies.  I like the rural areas because after oil goes down, you can pick up foreclosures cheap for cash.  There always seems to be a shortage of rentals in rural towns, and the rental rates are very high compared to property values.  You can buy some nice homes for under $40K in many of these smaller towns.  Also, there's limited competition when buying.  Good luck!!

Dan Turkel · Answer

To answer your question directly: a location where no tenant is willing to live because it's in the middle of nowhere is too rural to invest in. As long as tenants are willing to live in a given market, there is potential money to be made in that market. And if there's money to be made, it's not too rural to invest in!

Account Closed · Answer

I own a rental in a town of about 10,800.  Here are my experiences/thoughts...

1) Everybody knows everyone else.  Seriously.  Face time and reputation are huge.  Don't skimp on either one if you invest in a rural area/smaller town.

2) There aren't many property managers in these areas.  If you don't want to manage the property on your own, this could be an issue.

3) There aren't many hardware stores in these areas - the closest Lowe's/Home Depot to my rental is about an hour away.

4) LICENSED trade folks are tough to come by.  You might have an electrician, you might have a HVAC guy that doubles as an electrician.  You might not have access to a plumber.  This is a tough issue - everyone's situation is different.  The folks that are LICENSED tend to work on their own time....it's currently hunting season - they may not be around this week or next...

5) Rents could be absolutely outstanding in my experience - especially in areas near big oil & gas operations, near railroad areas, etc.

6) Landlord beware - Mayberry is a great place for folks like Aunt Bee, but there are also MANY folks that are intentionally hiding or avoiding other areas for whatever reason.  Don't be surprised if you have someone with full face tattoos, "no background" and references like the local hotel manager applying to rent your house.

Tony Whitaker · Answer

@Jason Hirko I lean towards buy and hold. Houses here don't sell very quickly but rentals go fairly quick.

Richard Heine · Answer

I am a rural investor.  I am Rural Home Management.  My properties are in a similar location except the really major city here is 35 miles away. I have found that the housing prices are way lower and usually come with a nice chunk of land  but the rents do not suffer as much.  Also, many people in rural areas don't save, are blue collar, and have family in the area. I don't have commuters.

Good renters are  harder to find.  Most of my tenants have great jobs ( and are nice hardworking folks) but all have judgments, garnishments, child support or alimony and cannot get a loan.  What I am saying is the rental pressure is high.  Plenty of renters looking.

I am not in the section 8 business but I called a county official that told me the waiting list of people wanting Sec8 was so long they closed the list mid year.  I think you can do great even in Podunk.

*R

Tony Whitaker · Answer

I have lived in small towns a few times, and I learned that they dont sell pretty quick. I have never bought a home but have seen the same house for sale 2 years or longer. I appreciate the feedback. I have a list of every home tgat is for sale in the town I am in. So maybe start seeing what I can do.

Tony Whitaker · Answer

Update: so the small town I live is dying according to the mayor, who doesn't live here. Of course this is 3rd, 4th 5th hand information.

Family moved in Sunday and we visited the school on Monday. I am amazed at how good the school. Principal and Superintendent are working miracles. Campus is 5 years old, school went from 70th or so in school rankings for its size and is now number 8.

Most residence work railroad or wind energy. Many people live a town over either way because there are nicer homes. Our town has many empty lots, dilapidated homes, and yards that need to be cleaned.

I may be wrong but getting a mayor in that lives in the community and wants to make it better would be a good step. Also, getting someone to invest in the real estate, renovate and/or build would help.

You won't get rich here but you could do a lot for a community and make a little money to invest in other areas to build wealth.

Well those are my thoughts, I am trying to see if I can at least be the leader in making the town better through real estate. Mayor part I have no idea.

What do you all think?

Matt K. · Answer

since you are local, you're the best person to ask this same question. Who's renting in these areas, where do they work (is it going to be around), what kind of places are they looking for, how's the supply, how much would it cost you.

Daniel Sitler · Answer

@Tony Whitaker,

There is opportunity everywhere! From a time management perspective I find it very advantageous to invest in my own backyard as long as the deal makes sense.

How rural is too rural for investing?

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