Seeking Advice: Local Metro or Nearby Rural Real Estate Investment?

[Robert-Lee Pass]

Hello fellow forum members,

I hope this post finds you all well. I'm within 90-120 days of making my first Investment purchase BUT I'm currently at a crossroads and could use some valuable insights from the experienced members of this community. I'm in the process of deciding where to invest in real estate, and I find myself torn between two options: The Local Metro area of Colorado Springs and the Nearby Rural region of Pueblo West, CO.  (NOTE : 30+ year hold , LTR, Appreciation is the goal cash-flow will become more valuable the older I get (hence the 30 year hold),  Duplex , 3/2/2 1500 per side 2024 build date in Rural Location. 

Each option has its own set of pros and cons, and I'm hoping to gather opinions and advice that could help me make a more informed decision. Here are some key factors that I'm considering:

1. Potential for Appreciation:
   • Local Metro: The urban environment often sees faster appreciation rates due to high demand and constant development.
   • Nearby Rural: While rural areas might not experience rapid appreciation, they can offer steady growth and potentially lower entry points. --> The building construction is brand new vs something at least 25 years old in the city.
     
   • --> Its about a 45 Min drive to reach the Colorado Springs Metro's Most southern city 'fountain', this is where I own my current House Hack/Personal home
2. Rental Income:
   • Local Metro: Rental demand tends to be high in metropolitan areas, attracting a diverse tenant pool.
   • Nearby Rural: I Have great comps as the neighborhood is just being built (6 other new builds with same floor-plan sold in that neighborhood in the last 2-3 years), there is a k-5 school on the same street in the neighborhood of the Rural build. 
3. Long-Term Development:
   • Local Metro: Ongoing development projects can positively impact property values over the long term. but probably wont increase at the same speed % wise as the more rural location.. maybe I'm wrong ill have to research now .. 
   • Nearby Rural: Limited development might mean slower changes to the landscape but potentially fewer surprises. The location is growing and its the safest city in that entire county. home-ownership rate is very high like 85% most of the homes were built in the last 24-36 months. Currently only 30 people per mile
4. Personal Preferences:
   • Local Metro: Older build , more expensive (at best its 0-100 cash-flow), higher rents, larger tenant pool
     
   • Nearby Rural: New build , cheaper (Will cash flow +500), rents a little softer but demand for new products and neighborhoods is real, tighter tenant pool.
     

Because this will be my first Multifamily as well as my first time being a landlord , I'm very much in love with the idea of very low CAP Ex Repairs needed in the first 5 years, the tenant quality applying to a new build unit in a new community, Just a much nicer and newer product for the money . I'm 30 years it would be nice to have a property that rents like a 1995 house does today and not a 50-70 year old property like a 1970 would be at year 30. Location of the unit is right up against that Lake Pueblo State park too. I actually frequently go there with the family in the summer.

I would greatly appreciate any experiences, advice, or considerations that could help me weigh these options more effectively. Have you invested in either a Local Metro or a Nearby Rural area? What factors did you find most crucial in making your decision? Any lessons learned or pitfalls to avoid?

Thank you in advance for your input. I'm looking forward to a discussion that will hopefully guide me toward making a well-informed choice.

- Robert-Lee

[Alecia Loveless]

@Robert-Lee Pass I have been investing in a more rural area for a long time. In about a 50 mile radius of 6 towns there’s maybe 45,000 people if even that many. We are surrounded by state and national forests as well as several ski mountains and golf courses.

The largest town has about 9,000 people and does have a Home Depot, Lowe’s, Walmart, Applebees, and a 99 Restaurant which is New Englands version of Chilis.

While the cost of entry is much less than towns farther south in my state things still start around $350,000 now. When I started back investing 4 years ago the price point was somewhat lower.

I have seen significant amounts of appreciation in the past four years but prior to that the area was still seeing 5-7% per year in appreciation.

I don’t see anything wrong with you buying the new construction property in the “rural” area if that’s what you’re leaning towards. As long as you take into consideration the possibility of a slightly longer vacancy factor in your calculations I think you should be fine.

You say you want this as a long term hold property and you never know what may happen in the next 10-20 years. People may flock to Pueblo West to get out of the city. This duplex may become the best investment ever!