As you build your real estate portfolio or look for a home to reside in, you’ll have to make tough decisions along the way. Deciding which property to purchase and where are just a few. Are you interested in urban, suburban or rural areas? Each one comes with unique advantages and disadvantages.
The right property location depends on your particular goals and lifestyle—there are no right or wrong answers. When deciding, consider your short- and long-term goals as well as your lifestyle and what’s feasible for you to maintain. Do you enjoy the fast pace of the city or the convenience of the suburbs? Is your commute time to and from the property a consideration?
Before choosing a property, consider the pros and cons of each location type.
- Various Property Types
In urban areas, you may find the greatest variety of property types ranging from condos and townhomes to single-family and luxury properties. This increases your options if you are an investor looking for tenants that desire the city life.
- Urban areas typically offer a larger pool of renters
Whether you occupy the property, rent it or are looking to flip it, potential job opportunities may also be a deciding factor for your location choice. Large companies tend to establish themselves in and around urban areas. Also, urban cities generally have a higher, more dense population with a constant influx of residents moving from other cities. For investors, this means the pool of renters is constantly growing and shifting, making it easier to find renters as needed.
- Access to transportation & amenities
Urban cities often offer easy access to public transportation and more amenities than other surrounding areas. You may also see a greater number of tourist attractions and destinations, including restaurants and retail stores. The more there is to do nearby, the more likely renters are to gravitate to the area. If you are looking to renovate and live in the property, consider your lifestyle. Does it match the nearby amenities? If so, then it might be worthwhile to bid on the property.
- Higher Prices
The average price per square foot will be the highest in urban cities. The price of a single-family home in a suburban or rural area may only get you a condo in the city. However, a higher cost of living may also equate to a higher monthly rent.
- More Turnover
Renters in urban locations may not be looking for long-term stability as much as a temporary place to stay. While you have a larger pool of renters, you could experience a high turnover with frequent, short-term commitments.
- More Affordable
When searching for investment properties or your next home, the price is often the initial and most critical factor to consider. As suburban areas are adjacent to large cities, they’re often much more affordable. In the suburbs, investors can often get more square footage for their money, breaking down the financial barrier of entry.
- Growing numbers of interested residents because of COVID-19
As a result of COVID-19, more urban Americans are making the move to suburban areas for the extra space and lower population density. This article further expands on the idea by stating, “suburban towns not really known for their rental stock have had huge spikes in activity, which is being driven in part by escaping New Yorkers.”
- Fewer Amenities
While suburbs offer shopping and dining options, they may be more limited when compared to city living. Additionally, suburbs often don’t offer the same rich cultural experiences as cities.
- Long Commutes
Suburban areas generally don’t offer many public transportation options. While suburbs are in general proximity to major cities, they may require a commute—at times, filled with traffic, road work or other inconveniences.
- Portfolio Expansion
Out of the three location types, rural properties may offer the most property for the lowest price. In many cases, investors can purchase multiple properties in a rural area for the same amount of money they would invest in one property in an urban location. Over time, acquiring multiple properties may allow investors to grow their portfolios and revenue much faster. And in the same way that suburban areas will benefit from urban residents seeking more room due to COVID-19, rural areas also can expect a rise in potential residents preferring the open space.
- Bigger spaces for less
For residents that put a premium on wide open spaces, rural areas can’t be beat. Homes in these areas are frequently cheaper than they’d be in suburban or urban environments, so people can afford bigger properties than they could afford otherwise. These larger areas aren’t restricted to the size of the house either. These homes often come with lawns and outdoor areas that are spacious as well.
- More people preferring rural areas
A side of effect of the COVID-19 pandemic is that more Americans are leaving cities for the benefits of rural living. Many people figure that the extra room rural areas offer will be a nice change of pace and the smaller population density will help them distance themselves socially.
- Less employment opportunities
If you’re moving to a rural area without employment lined up, you may find it difficult to find work due to the lack of available industries and sectors nearby. Even if you are employed, your spouse or other family members could face an uphill battle trying to land a job in a more rural environment.
- Smaller Market
This may seem obvious, but rural areas don’t offer the same amenities and public services you may find elsewhere. Your limited options can span from hospitals to retail stores. Due to lower demand, you’ll also see limited tourist attractions in these areas.
Investing in the right location is key to finding success as a real estate investor. Make sure that wherever you invest is both profitable and fits your lifestyle. And no matter where you choose to invest, Hubzu has the tools and resources to help you find the right property.