Rental Property Investor · Hope, IN · Member since 2018 · 19 posts · 2 votes
Hi guys,
My wife and I live in a rural area (pop. 2,500) and are surrounded by mostly smaller towns. We do have one city near us with probably 50,000 people and then of course we have Indianapolis.
Up to this point we have being targeting larger areas. However, I have found a few properties in some smaller towns that, in terms of cash flow at least, look like really good deals. I am talking about towns that have between 8,000-15,000 people. I am finding duplexes and single family homes for under $60,000 that I believe would provide a 20%+ cash on cash return and a couple hundred bucks minimum cash flow each month.
Is it crazy to buy in these areas? Most have slight negative population growth (-1-2%) however, these towns are all within commuting distance of Indy. I know I likely wont see a whole lot of appreciation (if any) on properties in these areas but part of me feels like there is some real potential to make some money over a 10-15 year holding period, especially if I can knock $10-15k off the asking price. For a beginning investor, it seems like a low barrier to entry way to get the ball rolling.
Residential Real Estate Broker · Miami, FL · Member since 2014 · 214 posts · 106 votes
8y
Not sure about Midwest (I know its a cash flow area, not much for appreciation), but rural parts of Florida rent really well (easier to find a 10cap+ vs the cities).
Residential Real Estate Broker · Miami, FL · Member since 2014 · 214 posts · 106 votes
8y
Not sure about Midwest (I know its a cash flow area, not much for appreciation), but rural parts of Florida rent really well (easier to find a 10cap+ vs the cities).
Rental Property Investor · Member since 2018 · 483 posts · 956 votes
8y
The first rental I bought at 18 for $7800 dollars was in a town less than 2500. It rented for $450 a month and I sold it to the tenants who rented it for 5 years. I never put a dime in it except purchase price and taxes. When I was building my first rental portfolio most of my properties we're in midsize cites. I would buy in small towns again if I really knew the market.
Olathe, KS · Member since 2018 · 148 posts · 207 votes
8y
There's definitely money to be made there, you usually only run into two problems with smaller towns. One, finding a property manager can be very difficult depending on the town. Two, it can be very difficult to sell property like that in a smaller town. You're correct on the appreciation, likely won't see much. I grew up in a small towns my entire childhood, cheap property and great people but in 20 years it will still be cheap property and great people. :) Cash flow is cash flow though, for a 20% return I'd buy in small town all day. So what if I could never sell it, why would I want to if it's making 20%? :)
Uvalde, TX · Member since 2016 · 141 posts · 45 votes
8y
I live in a small town with smaller towns surrounding us. The nearest big city is about 1.5 hours away. The disadvantages are obvious but I think there are some advantages that make it worth while. As you know, everyone knows each other. Finding out who owns a property is easy. Also, branding yourself is easy. Competition is low. Networking with local businesses will get your name out fast. For instance, I know a few shop owners, mechanics, restaurants, etc. and got permission to put my business cards on the cashier counter.
As far as the numbers, if they work and you can see them working in the near future, then why not?
Small towns can be a niche and you can corner your town and all the surrounding small towns.
Rental Property Investor · Member since 2018 · 483 posts · 956 votes
8y
I forgot to mention I did sell that first house for $32,000. But we had a rash of teenagers burn down almost every unoccupied house in town. Very tragic but it did increase property values.