Advantages and Disadvantages of Investing in Small Town

[Jeffery Leon]

My agent just sent me a property that is currently being leased and tenants recently renewed their contract. From my calculations, this property can cash flow very well. The dilemma is it is located in a small town with less than 3000 people in the population, 20 minutes drive to next large city. My concern is finding new tenants in the future while keeping/ increasing rent. Is this worth the risk of pursuing or shouldn't be a concern? 

[Andrew Johnson]

Jeffery Leon I think you'd have to differentiate between "small town" and "suburb". If you have a major metro area I think you'll always have people that want to "escape the city". However, if you're a "suburb of a suburb" it's a little different. Others have brought up great points around a singular employer and the associated risks with that. One other risk I'll throw out there is property management. There might be just one game in town, which means if they are either expensive (or lousy) you're sunk. Having a PM around 20 minutes away doesn't sound like much but every "easy" trip their is an hour. Their in-town lock vendor now has to drive 20 minutes, change the locks in 20 minutes, and drive back 20 minutes. Add in a PM to be there while it's happening and you have 2 hours of labor that you're either paying for directly or indirectly. Hope this helps.