Rentals - City vs Suburbs

[Alexander Merritt]

What is everyone's view on rentals in big cities vs out in the suburbs? Which would present more opportunites or would be easier to grow? What are the advantages/disadvantages of each.

Thanks in advance.

[Chad Kamerad]

I think the choice depends on what your financial situation and goals are. Buying in a city center tends to be more expensive. The upside however is a larger pool of tenants and the potential for huge appreciation (depending on the local market). There are downsides to renting in the city but are mostly dependant on the local laws and economy. 

The suburbs can be a huge plus as well. You can purchase more properties for the same ammount of money (thus limiting your risk somewhat). This is a double edges sword as rents are generally lower so you have to manage more tenants to get the same profits. The pool of possible tenants will be smaller in the suburbs. This is another double edged sword. You can pick better neighborhoods in the burbs that will attract better tenants. You may also have longer periods of vacancy.

So really both choices are great options for investment. It mostly depends on your preferences and what you are willing to spend. I would advise you stay clear of bad neighborhoods and ghettos even if the potential returns look great. There is money to be made in those areas but it takes a seasoned and thick skinned investor to be successful in those areas. I plan someday to invest in low income areas (there are too many slum lords who mistreat people in my area) but not until I am completely ready and educated.