Challenges with owning rural properties?

7 Replies

Hi! I'm looking at some rural properties, specifically in Ohio, within 1-2 hours of Columbus - but mostly asking in general - to investors who buy or own rural properties...

How difficult has it been, in your experience, to find contractors for rehabbing & renovating your rural properties? Is there anything else should I consider before I buy rural? What do you wish you knew before purchasing yours?

My investing goal for this property will be as a primary residence for now, so not worried about rental rates or sales prices anytime soon, though it would be naive to ignore them completely, but my main goal is just looking for a property with deferred maintenance, something that I can add value to over time, hence my immediate concern that I'll be able to find the contractors and builders to do the work.

But anyway, figured I'd ask about your experiences before goin in blind! 

Are my concerns even valid? Am I worrying about the right things here? What else should I be considering with a rural property? 

Any insight is appreciated! Thanks!

We bought an old house in rural Nebraska, about an hour north of Omaha. Finding contractors hasn't been an issue. The price was extremely good—or so we thought—at just $31,000. Right away, though, we got smacked with a $38,000 roof because the last several owners had chosen instead of fixing the roof to just add more layers on top of a roof that had already been leaking for at least five years.

The moral of the story is, foundations aren't the only extreme capital expense. But the moral beneath the moral is, when you do buy rural, property doesn't appreciate like it tends to in metropolitan communities. While I understand your point of view that you're not as worried about selling price, it's worth it to know that whatever you buy probably has a hard cap for how much you can put into it and expect to get out, and that cap is a lot smaller than buying and doing a slow live-in flip in the city.

A few other details that matter to me, and I wished I'd known. Splurge on a good water system. Hard water in rural communities, whether it's municipal or well water is hard on appliances, bad on cloths, unenjoyable to drink, and a hazard to boil. Budget for good filtration! And lastly, if you have a pet and need a fence, just go ahead and get that fence. So many people out here in the boonies just let their German Shepards and Shnoodles run free. It's a recipe for WWF Doggy Takedown.

Best of luck!

Originally posted by @Jody Sperling :

We bought an old house in rural Nebraska, about an hour north of Omaha. Finding contractors hasn't been an issue. The price was extremely good—or so we thought—at just $31,000. Right away, though, we got smacked with a $38,000 roof because the last several owners had chosen instead of fixing the roof to just add more layers on top of a roof that had already been leaking for at least five years.

The moral of the story is, foundations aren't the only extreme capital expense. But the moral beneath the moral is, when you do buy rural, property doesn't appreciate like it tends to in metropolitan communities. While I understand your point of view that you're not as worried about selling price, it's worth it to know that whatever you buy probably has a hard cap for how much you can put into it and expect to get out, and that cap is a lot smaller than buying and doing a slow live-in flip in the city.

A few other details that matter to me, and I wished I'd known. Splurge on a good water system. Hard water in rural communities, whether it's municipal or well water is hard on appliances, bad on cloths, unenjoyable to drink, and a hazard to boil. Budget for good filtration! And lastly, if you have a pet and need a fence, just go ahead and get that fence. So many people out here in the boonies just let their German Shepards and Shnoodles run free. It's a recipe for WWF Doggy Takedown.

Best of luck!

Thanks for the tips! I think that's a good approach to cap the budget beforehand so I don't get carried away with improvements, even if I tell myself "they are for my own enjoyment" lol

I feel like that roof thing could happen to anyone! Did you know it was going to need to be replaced going into the deal? Or was that total surprise? And how can a noob like me avoid getting stuck with something unexpected like that? Would an inspection find something like that beforehand?

The fence was another thing I was thinking about, since I do have a few shepherds myself! But I wasn't sure since I see so many of those homes have no fencing, if maybe fences everywhere were just a city-folk thing lol but nope - the fence is just as much there to keep my guys in, as it is to keep theirs out!

...I wonder how much it would cost to fence in an acre 6' high... 

Challenges aside, would you say your happy with your rural purchase?

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We've lived in rural northern CA our entire adult lives. There's a big difference between being in a rural area vs being in the middle of nowhere. Rural areas often have smaller, but lively communities - and this includes your contractors/trades. For example, in our small town (pop. approx 3000, unincorporated area of the County) I know at least 10 GCs and half a dozen electricians and plumbers and the guy across the road from me owns a painting company. We have one full service glass shop in our town, dozens and dozens of Realtors and every property management company in our area services this community although their offices are typically 15-25 miles away.  I'd recommend you call the local Chamber of Commerce if there is one and ask what kinds of businesses and services are available in the area if you're concerned or just start googling. A couple of things to be aware of about living in a rural area are: you almost always will be on a well, which has its challenges. If the power goes out you have no water because you need the power to run the pump. Repairs can be very costly and if it runs dry you have to hope you can dig another. This is becoming a big issue in CA. You're also going to be on a septic system and maintenance is all on you. In our 20+ years at this location we've only had to have ours pumped twice and it cost about $350 each time, so not a big deal. But if it fails, it's on you to repair or replace it. You're probably also not going to have access to gas lines, which means putting in a propane tank if you want gas. Again, not a big deal but it can be an overlooked expense. And depending on how far out you are from city services, you might want to factor in response times for emergencies. You also may be spending a lot of time and $ driving back and forth to the "city" for groceries, errands, appointments, etc and Domino's Pizza definitely does not deliver ; ) Those are the main issues. There are a lot of great things about being in a rural area, though, space being one of them. People also tend to be friendly and helpful.

From what I've seen... 

Urban = Appreciation and moderate cash flow.

Rural = Less appreciation and (possibly) better cash flow (IF you self manage! )

There can be great contractors in rural areas. There can be terrible contractors. Same with property managers. You have to run numbers based on your personal goals and financial situation. Normally, I'd stick closer to urban areas (jobs). BUT, there have been some ridiculous rural cash flow deals cross my desk.

(for what that's worth)

So much to think about, I'm already glad that I asked! 

I think I need to make sure I have a good exit plan for the property and not lose sight of where it fits into the big picture. I do like the idea of small-town living but it may have to be a luxury that I continue building up to until I can take a little more risk. 

I do plan on having property manager eventually but for now I do want to self manage so I can learn those skills before passing them on <--(Is this a good plan, or might I be better off just hiring the manager right from the beginning?)

@Bonnie Low Rural vs middle of nowhere is a good distinction. My dream house I can't see my neighbors and my dogs can run free over the horizon - would that be middle of nowhere lol or can I find that in a rural setting? I never thought about the difference... and even though I can make an way better pizza than Dominoes, I do like having the option lol 

Thanks for the tips on the utilities as well, I'll look into what it takes to run/replace those because those are not numbers I've ever had to run! I was looking too at adding solar for extra self-sufficiency, which might help with the pump issue you mentioned, definitely something worth including in the plan!

@Carl Murray Thanks for mentioning the jobs thing, I'll be watching the work-from-home trends in nearby cities to see how that could open up some untapped potential - There must be folks (me?) who would love that sort of lifestyle if they worked from home - but reliable internet would be a must! For that crazy cashflow, was there something in particular that made them so? I'm thinking it might have to do with something with higher risk/higher reward?

@Mike Hasson , I knew the roof needed to be replaced, but wasn't prepared for the perfect storm of spiking lumber costs and hidden labor. The house had seven layers of roofing on it. We could see three. All that extra labor and waste added up. Four 40-yard dumpsters to get rid off the rubble!

I enjoy living in this town, and I've told my friends and family (who strangely seem slightly fascinated with the notion that I am so stupid that I will go bankrupt and have to repent for evangelizing about the amazing opportunities to those who invest in real estate) that this house was a failed investment, but that failure means I'll break even and end up living cost-free for two years.

That's one of the many things I love about real estate. Often failure for us means we don't make as much money as we thought we would. Failure for most other people means losing money. (Also, the fence would be pricy, and it's hard to part with that money because in general it won't add to the selling value of the property, but sometimes a person has to do what a person has to do!)

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