It’s a known fact that there is a need for apartments in large cities where they are overflowing with people. However, many investors are winning big by investing in small towns.
According to some multifamily investment experts, apartment properties in small towns can earn superior yields. There is also a growing need for multifamily property smaller towns. The key to this kind of investment success is having a smart strategy and local knowledge.
Reasons investors are having success with small town apartments are because:
- Less Competition. There is less competition when it comes to housing availability in less populated areas. This means new construction on current properties won’t have to fight for business like in large cities.
- No Bidding War. Because of the lack of competition, there are not many people to outbid you or drive the property price higher. This is great news for investors.
- Less Urban Issues. There aren’t as many rules, regulations, taxes, and crime like there are in large urban cities. Many rules and regulations are more lax. There isn’t as much red tape to go through when developing and revamping properties. In fact, most of the time there is more room to grow and expand. Taxes are usually not as high and often times there are tax breaks for investing in small town property.
- Property is Cheaper. Property is generally less expensive in small towns. Great news for investors. With the combination of cheaper property costs, less competition and now bidding wars, small town properties can be extremely smart investments.
- Helping the Community. Investing in small towns helps with economic and community grow, bringing in more business and promoting more growth. There are also many government kickbacks for supporting small communities and helping them grow.
With all that said, local knowledge and a smart strategy is a must to make rural investment a success. There are two factors to consider when investing in multifamily properties in small town areas.
- Find a Strong Market. There are many small towns where the demand for apartments are strong. One must do their research and talk to local realtors before making a purchase. According to National Real Estate Investor, the average cap rate for small town apartments was 6.5% over the last year and 4.8% for urban areas. It is a good time to invest in small town apartments. On top of that, rural construction is less expensive, as mentioned above, and there is no risk of overbuilding, making small town apartment properties a smart investment.
- Look for cities whose job growth is increasing. When the job market increases so does the need for housing. Not always, do people want to buy, especially if being relocated for a job. We are seeing this more and more. Small cities and towns are becoming homes to large manufacturing operations and corporations, bringing hundreds to thousands of new workers to small town communities. Small growing towns are welcoming the new business and expanding their infrastructure to accommodate. This includes multifamily properties!
There are many great reasons to invest in multifamily properties in small cities and towns. Many investors have had much success and with big businesses moving out of town, it’s only going to get better. Having a smart plan and local knowledge can be highly beneficial for investors. Working with realtors that specialize in investment properties will only add value to multifamily property purchases.
Grace Frank is one of Chattanooga’s Top Investment Realtors with deep knowledge in local economics and affairs. She works with many of the top developers to guarantee her investors are always benefiting. If you are looking to invest in multifamily property, you must give her call today!
Learn more about the Grace Frank Group