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The Pros & Cons of Buying Rural Occupied Properties

December 19, 2019

There are many factors to consider when buying a property—three major ones being price, location and whether or not the property is currently occupied. While rural, occupied properties may seem more daunting, they come with numerous advantages that you can’t afford to ignore. Here are some major pros and a few cons to consider when purchasing rural, occupied properties.

Pros of buying rural occupied properties:

Lower Property Prices & Interest Rates
Both occupied properties and houses in rural areas often come with lower price tags which can make the savings truly unbeatable. With these savings, there’s less cash needed at the time of purchase as well as the potential for higher return and increased cash flow, equity and overall returns.

Less Competition
As an investor in rural, occupied properties, you may find yourself sitting comfortably at the sweet spot between more options and less demand. High demand tends to drive up prices, so more experienced and savvy investors may opt for rural properties, lowering overall competition and ultimately, the final price tag. High availability coupled with lower demand makes it easier to find the property you’re looking for.

Easier Expansion and Development
Investing in rural areas helps avoid common urban issues, including complex laws and regulations, higher taxes, HOA regulations and fees and potentially higher crime rates. Less complex laws and regulations can save you both time and money and make it easier to expand your business. These properties may also be easier to sell or rent, as potential renters and buyers can look forward to low or no homeowners association fees, lower crime rates and easy access to major cities with the peace and tranquility of a rural community.

Greater Community Impact
If you’re planning on buying and/or renovating multiple properties and building a brand, you can have a more significant impact in rural areas. Smaller towns may provide greater brand recognition as well as a more substantial impact on the surrounding community. If you’re truly looking to make a long-term economic and cultural impact in a community, investing in rural areas may be the way to go.

Long-Term Stability
Being distant from larger cities decreases the chances of being impacted by economic fluctuations, making your investment much more stable. Investing in rural areas can help avoid the ups and downs in the market, offering greater support and consistency.

There are plenty of pros that come along with investing in a rural, occupied property, but in order to make an informed investment decision, you must also be aware of the potential cons. Before purchasing, make sure you understand the disadvantages that may come with rural, occupied properties by taking the following into consideration.

Cons of buying rural occupied properties:

Possibility of Eviction
Is the current occupant the former owner of the home or a tenant of the previous owner? The answer to this question will determine your next steps. Even after purchasing an occupied property, the lease held by the previous owner still applies, and removing the tenants can be complicated depending on the state you live in. If the occupant is the former homeowner, and you’re planning to flip the house or make renovations, you may have to seek legal counsel to understand eviction laws and vacate the property. Be sure you’re prepared for this possibility before pursuing an occupied property.

On the other hand, the occupant might be willing to sign a lease and make payments to the new owner, providing you with an instant tenant. If you acquire the property at a discount, you may be able to offer a lower rent payment, benefiting both parties.

We recommend doing your due diligence by familiarizing yourself with eviction laws in your area and reaching out to an eviction attorney to better understand the cost, timeframes, and overall process. Additionally, an experienced agent can help point you in the right direction and provide further resources. This will be time well spent should you ever need to go down this path.

Smaller Buyer & Tenant Pool
In rural areas, you can expect a smaller population and therefore, a smaller pool of tenants and buyers. This could make certain real estate investment strategies less effective, such as wholesaling. If you’re hoping to rent or sell multiple properties, remember that your rental and buyer base will be much smaller. Truly understanding the market will be key to your success.

Smaller Economy & Market
Rural areas also offer smaller economies and markets and the possibility of minimal real estate appreciation. Keep this in mind if you’re hoping for large profits in a short timespan. Economies in rural areas tend to be steadier with slower growth.

Every valuable investment comes with some risk, and it’s imperative to make informed decisions. While it’s important to consider both the advantages and disadvantages of purchasing rural occupied properties, the pros likely outweigh the cons. Ready to browse rural, occupied properties currently on the market? Find them here.

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Buying a Property  / Market Trends

Edgard Negron

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