Investing in small towns
the operating expenses for the property, and the mortgage terms from your lender.
We’ve all heard the saying “location, location, location” when it comes to real estate. For investors, it’s mostly about “jobs, jobs, jobs” because when the employment sector is robust, the rental demand is strong. But when there is a lack of jobs, the demand for rentals decreases. Before buying in a small town, investigate the employment situation to determine what the demand for your rental will be and what you can expect to receive in rental income.
Team building can be challenging
Investors know that they need a team of professionals in their corner when purchasing or selling an investment property. However, it’s difficult finding the right professionals like lawyers, inspectors, mortgage specialists, appraisers and investor focused realtor in small towns. If you’re an out of town investor, you might need to self-manage the property if you’re unable to find a suitable property manager in the area. Whatever you do, make sure you have a team in place in before you start placing offers or you could run into delays or even lose out on the property.
Planning how you will exit the property is extremely important especially in small towns. Do you have strategies in-place in case you need to sell or if the market tanks? Do you have enough rental income from other properties to absorb losses from this property? Would offering incentives help fill vacancies faster? Can you afford to reduce the rent over a sustained period of time? Would you be open to selling using Rent to Own (RTO) or Agreement for Sale?
Buy for cash flow
No, check that…buy for LOTS of cash flow to help offset the higher vacancies, the potentially higher operating costs, and the longer days on market when it comes time to sell.