If you want to break into the real estate industry, one of the questions you will have to answer is whether rural or urban properties make better investments. To make a good decision, you need to consider the numerous ways in which property investments vary in these two locations. Here are some of the major factors that are different for rural and urban property investments.
Regulation and Laws
The real estate industry is one of the most regulated industries in the country right now. Real estate laws determine which business you can have in a property, the property taxes you have to pay, and the nature of property improvements you can execute. However, the regulations tend to be tighter for urban properties than rural properties. Thus, if you are someone who abhors bureaucracy and don't want to deal with numerous laws and regulations, opt for the urban route.
The tenant pool tends to be larger in urban centers. Urban areas have higher population densities and high rates of internal migration, both of which increase the tenant pool. Thus, even though the tenancy turnover may be high in the urban areas, you are likely to have your houses occupied faster.
Your real estate investment requires some support businesses to thrive. These support businesses tend to congregate in urban centers so rural properties may suffer. Examples of support businesses you may require include contractors (such as those you may need to renovate and maintain your properties) and property management companies.
Rural properties tend to command lower prices as compared to urban properties. The low barrier of entry means it's easier to break into real estate investment in the rural area as compared to the urban centers. The factors above, such as less regulation in rural areas and a low tenant pool, are some of the factors that translate to low prices for rural properties.
Urban properties tend to fetch better income than rural properties. Whether you are buying for resale or investing in rental properties, the urban properties may help you realize higher revenues than rural properties. Just note that the high revenues don't automatically translate to higher profits because the urban properties are also expensive to purchase in the first place. Consider the return on investment to get a true picture of which option will give you a higher profit.
Contact a real estate agent for more information.Share