Rural vs. Urban

[Paul MacInnis]

Hi all,

I'm curious to your thoughts on the following topic:

With regard to small multi-family properties (2-6 units) do you always buy in urban centres or have you branched into any rural markets.

I ask because all of my properties are in rural markets.  I have little to no vacancy, decent rents, and although appreciation isn't going to skyrocket (even in a boom period), I find the properties very accessible in terms of cost.

Part of me is tempted to gravitate towards my next property in an urban area BUT when the sticker price is 2-3x what it is in the rural setting......it's difficult to decide!

Love to hear your thoughts!

Cheers

[Roy N.]

@Paul MacInnis

There is a difference between rural and Rural.   While Windsor is "ruralesque" it is becoming less so over time.  While the reduced commute time to Hfx offered by the new highway likely has little direct impact on your tenant population, it is bring more folks out as far as Windsor / Falmouth to purchase homes which has a smaller, indirect impact on local service jobs/tenants.   The extension of the new highway through to New Minus, once completed, will likely have a bigger impact.

Essentially, if you are in a ruralesque market whose economy is staying relatively flat, then you could carve out a profitable niche.   

Conversely, if you were in a community with a shrinking/failing economy (take a drive down Digby Neck to the islands), then your tenant pool is going to deteriorate over time and your economic vacancy and maintenance costs are going to increase.   I looked at a portfolio in Digby a couple of years ago and arrived at that very conclusion - unless a new industry comes to town, it's only going to get worse {BTW:  That portfolio is still available - and still overpriced}.

Usually, buy what you know, is a good adage to follow, but you need to be honest with yourself about what you know first and then determine if it is worth buying.