Urban, Suburban, or Rural: Which is Best for Investing?

One of the best things about investing in real estate is the diversity it provides - not just for your investment portfolio, but also within itself. With property, there are lots of opportunities to diversify. Property type (residential or commercial), location, and property class all offer different benefits for you to take advantage of when building this asset class in your portfolio.

Today, my focus is on location. In the real estate biz, we talk a lot about location, location, location. Usually what we’re referring to is the market and/or a specific neighborhood. Is a particular market growing? Is this neighborhood a good, cashflowing one? While these are very important questions that you need to answer before you close on any deal, my post today covers a different, broader aspect of location - namely, does it make more sense to invest in an urban, suburban, or rural property?

First, let’s look at some of the pros and cons associated with each. Keep in mind that these are generalizations, and different properties are going to present different circumstances.

Urban Property

Pros

• Lots of variety in property
• Easy access to transportation and other amenities
• Large pool of renters

Cons

• Higher crime rate
• Higher turnover
• More wear and tear on property

Suburban Property

Pros

• Long-term renters
• More house for your money
• Lower crime rates
• More outdoor space

Cons

• Smaller pool of renters
• Fewer amenities
• Less variety

Rural Property

Pros

• Development potential
• Even more house for your money
• Fewer zoning restrictions

Cons

• Smaller economy
• Less qualified renters
• Public services may be limited

These are just some of the advantages and disadvantages that come with each of these location types. Again, they’re generalizations, and by no means are they meant to be interpreted as guaranteed characteristics of each location type.

When deciding which location is right for your money, it really comes down to one thing: which one will best help you reach your short- and long-term expectations? If your dream is to dump your 9 to 5 job and make your money off of 10 properties, urban investments might be better suited for you. You can find a great location, start with one house, then use that to leverage the purchase of another, and another, until your properties are allowing you to meet your income goal. Or maybe you’d like to retire to a nice bit of land someday, but you’re not ready to do it just yet. An option might be to invest in a rural property and lease it until you’re ready to move there yourself.

Urban, suburban, or rural...all have something to offer. The key is to find the property that makes not only the most financial sense, but also the most “life” sense. What I mean by that is, does that property work with your life, now and in the future? Does it align with your goals? If you can say yes to those questions, and you have the numbers to prove it’s a worthy investment, you’ve got your answer.