Investing in small towns

[Yonit Young]

Hi!

Trying to take my first steps in real estate investing, and I'm also looking at small towns. As part of my research, I'm trying to understand if there is a need for rental properties. When I check on Zillow, for example, I see that there are very few properties offered for rent. Is this an indication that will it will be difficult for me to find tenants?

Thanks in advance for any comment.

[Nathan Gesner]

Quote from @Yonit Young:

No answer is that easy. I'm in a town of 10,000 and manage 400 rentals. I currently have three advertised for rent. In 2019 I would have around 15-20 advertised at once. Demand is high, inventory is low. The sales market makes it difficult for people to buy a home, increasing the demand for rentals.

You have to look at inventory available, but also what the demand is for that inventory. there may only be six properties listed in Zillow, but they may be renting really cheap or sitting on the market because nobody's looking.

[Eliott Elias]

Talk to realtors and property managers. They are eyes and ears on markets like this. 

[Jared Hottle]

No one size fits all but I like small towns. Prices are lower, taxes usually lower, less government oversight yet still usually a high demand for rentals and to get into a small town for the schools, safety, etc. Definitely more of a cash flow play, many times older homes that need more maintenance and finding contractors to work can be difficult depending on how close it is to larger city. 

[Joe Funari]

@Yonit Young The rent comps for that small town will tell you the days on market for a rental. Personally, I love to invest in smaller towns around the Dallas/Ft. Worth area. In the "metroplex" average days on market for a rental is around 17 days. Demand for rentals is very high here in Texas. But in the smaller towns the average days on market may be 20 to 30 days here. Again, not bad. But you expect that demand is a little less in small towns. But the purchase price savings outweigh this in most cases. But if there are active lease listings in the small town in question if they have been on the market less than 30 days I am usually not concerned. Especially if your financing the deal or rehabbing it before marketing for lease. Also, check to make sure those rentals are comprable to the subject property your looking to purchase. In some cases these other active lease listings may not have a 2 car garage. Or only has 1 and a half bath. I always recommend your first rental purchase should be a SFR 3/2/2. Most common build and easiest to rent. Hope this helps.

[Ricardo Hidalgo]

Quote from @Yonit Young:

Hi!

Trying to take my first steps in real estate investing, and I'm also looking at small towns. As part of my research, I'm trying to understand if there is a need for rental properties. When I check on Zillow, for example, I see that there are very few properties offered for rent. Is this an indication that will it will be difficult for me to find tenants?

Thanks in advance for any comment.

 Here are some towns to consider based on the economics, affluence of buyers and stability: 

The Emerald Coast, which includes cities such as  Destin, Fort Walton Beach, and Panama City Beach, has seen job growth in recent years, particularly in the tourism and hospitality sectors.According to the Florida Department of Economic Opportunity, the leisure and hospitality industry is the largest employer in the region, accounting for over 27% of total employment. Other major sectors in the region include retail, healthcare, government jobs, professional and business services.In recent years, the Emerald Coast has seen growth in areas such as technology, aerospace and defense, and manufacturing, which have the potential to create higher-paying jobs and contribute to economic diversification.

Overall, the job growth perspective on the Emerald Coast is positive, with a diverse mix of industries and a strong focus on tourism and hospitality. In addition, there are more than 5 military bases in the nearby area that support many government positions in the local economy. As some of the bases start to rebuild after the hurricane, more opportunities for growth will occur to meet the new demand in our area.

[Yonit Young]

Quote from @Joe Funari:

@Yonit Young The rent comps for that small town will tell you the days on market for a rental. Personally, I love to invest in smaller towns around the Dallas/Ft. Worth area. In the "metroplex" average days on market for a rental is around 17 days. Demand for rentals is very high here in Texas. But in the smaller towns the average days on market may be 20 to 30 days here. Again, not bad. But you expect that demand is a little less in small towns. But the purchase price savings outweigh this in most cases. But if there are active lease listings in the small town in question if they have been on the market less than 30 days I am usually not concerned. Especially if your financing the deal or rehabbing it before marketing for lease. Also, check to make sure those rentals are comprable to the subject property your looking to purchase. In some cases these other active lease listings may not have a 2 car garage. Or only has 1 and a half bath. I always recommend your first rental purchase should be a SFR 3/2/2. Most common build and easiest to rent. Hope this helps.

Thank you!

[Yonit Young]

Quote from @Ricardo Hidalgo:

Quote from @Yonit Young:

Hi!

Trying to take my first steps in real estate investing, and I'm also looking at small towns. As part of my research, I'm trying to understand if there is a need for rental properties. When I check on Zillow, for example, I see that there are very few properties offered for rent. Is this an indication that will it will be difficult for me to find tenants?

Thanks in advance for any comment.

 Here are some towns to consider based on the economics, affluence of buyers and stability: 

The Emerald Coast, which includes cities such as  Destin, Fort Walton Beach, and Panama City Beach, has seen job growth in recent years, particularly in the tourism and hospitality sectors.According to the Florida Department of Economic Opportunity, the leisure and hospitality industry is the largest employer in the region, accounting for over 27% of total employment. Other major sectors in the region include retail, healthcare, government jobs, professional and business services.In recent years, the Emerald Coast has seen growth in areas such as technology, aerospace and defense, and manufacturing, which have the potential to create higher-paying jobs and contribute to economic diversification.

Overall, the job growth perspective on the Emerald Coast is positive, with a diverse mix of industries and a strong focus on tourism and hospitality. In addition, there are more than 5 military bases in the nearby area that support many government positions in the local economy. As some of the bases start to rebuild after the hurricane, more opportunities for growth will occur to meet the new demand in our area.

Great input! Thanks!

[Dwayne Byrd]

That information is very hyperlocal and the definition of "small town" matters as well. There will always be a need for rentals everywhere. I would make sure the numbers make sense for the investment. Sometimes you can find lower priced properties in small towns, but the overall values are lower, which bring lower rent etc. Look on the mls and see how long homes have been on the market and available, and compare that to your potential investment. 

[Yonit Young]

Quote from @Dwayne Byrd:

That information is very hyperlocal and the definition of "small town" matters as well. There will always be a need for rentals everywhere. I would make sure the numbers make sense for the investment. Sometimes you can find lower priced properties in small towns, but the overall values are lower, which bring lower rent etc. Look on the mls and see how long homes have been on the market and available, and compare that to your potential investment. 

 Thank you Dwayne, that's helpful!