Opportunities in a small vs. large city?

Question

How is starting out investing in a small city vs. a large city?

I live in a relatively small city and there are no opportunities that I can find to meet with other investors or other people interested in investing.

However, since it's a smaller city, would I have less competition for real estate or would it balance out since there's less real estate total as well?

Rodney Robinson · Answer

Yea Bill Gulley  I'm also in a smaller town than I am used to. I am in the process of scrutinizing my local market for a complete understanding of sales, rents, neighborhoods and opportunities. I think this is more important than competition. You can have no competition and fail in market analysis and make bad deals or investments. However, even with great competition, but a greater market understanding and patience for truly good deals, I think this is a better position to be in. I'm honestly not there yet, but I know that's where good investors (in anything) should be.

Justin Foster · Answer

Bill Gulley

That's actually a lot simpler than I was making this out to be. I got so caught up with real estate I missed the obvious method of just choosing which one I'd rather live in. Thank you for helping me out!

Bill Gulley · Answer

I wouldn't pick where to live based on some RE method, learn RE, not some system. No market remains the same, gotta be flexible to  stay in one area long term. I'd pick the best place to live, learn the market and do what fits the market. Trying to pick some scheme and work that is putting a square peg in a round hole, be able to meet the circumstances and make deals happen. :)

Justin Foster · Answer

Bill Gulley

I haven't been here for very long, so it feels more like I'm looking at two cities I've never been two and deciding which one I want to get started in. I know I can be successful in either one, so I'm not sure what I method I should use to choose where to go.

I hadn't heard that saying before, but it makes a very valid point. I'll need to think about that for a while.

Bill Gulley · Answer

Justin, I nor anyone else can tell you where you would be most successful.

I'd think prices would be higher in Cali, rents probably with the price but the barrier to entry to acquiring may be higher.

There is an old saying too, grow where you are planted. :)

Justin Foster · Answer

Bill Gulley

I'm looking to do rentals at first.

I live in Anchorage, Alaska which is relatively small, but has a steady growth rate. I might be able to go to San Diego, California which I don't know anything about.

One thing that makes San Diego very appealing is that there are a lot of REI meetup groups, where Anchorage only has one consisting of 4 beginner flippers.

Bill Gulley · Answer

First it depends on what you want to do, flipping, rehabs, rentals, wholesale deals, etc.

What are the populations? Small city is pretty vague.

Look to the number of sales in an area on the MLS, or the recorder's office, someone has the stats. It tells you what the activity level is, but many investor deals are made, not found.

Small towns are clickish, there seems to always be some old investor known in the area, he may know property values by the address, they usually think they have the town locked up, they might too being on the board at the bank. Don't think there is no competition in small towns.

Larger cities will have more people involved in RE, the competition may be more sophisticated, bigger players, more inventory but more feeding off it too.

Smaller towns usually have slower turn over, a property that's difficult to sell is easier to buy. It may be harder to sell again too, great for landlords.

What you need is an area that is growing, that has a stable economic base and that has sufficient inventory for what you want to do. Don't worry about competition, worry about the inventory in your niche market. :)

JOAN DICKIE · Answer

I just moved to a small city in Wisconsin.  The area population is about 65,000.  I think there will be opportunities here, but I have to really market to find them.  There are not many foreclosures.  The opportunities as I see them are an aging population and the 3 colleges in the city.  There are already many rentals, but there are more investors looking for rentals and hopefully some looking to de-vest themselves.  If you market constantly and consistently, you will find opportunities.  There is plenty of competition where you are (I don't know where exactly, but there is ALWAYS competition), but if you are marketing the heck out of your town, you will beat most of the competition.

Being an investor is like being a realtor.  Your job isn't buying real estate, it is lead generating and conversion.  If it's ok to plug someone's book on this forum, read Danny Johnson's "Flipping Houses Exposed".  I got it free on Kindle.  It goes into detail on how much marketing you need to do to get leads.  It really rang true based on my experience as a realtor.

One thing to be careful about that I noticed.  I was tempted to market in even smaller towns around the (slightly) bigger one that I live in thinking I could get homes even cheaper.  Don't fall into that temptation until you research - 1.  how fast the homes sell (if you flip) or 2. how much they rent for.  When I checked that out, I saved myself much frustration and future marketing dollars.

Good Luck!