When we consider investing in real estate, the majority of us think about doing so in the city. There’s something glam about the idea of being a New York landlord, isn’t there? Even if you can’t afford to live in an area like this, owning rentals here could at least get your foot in. And, there are apparent benefits to buying rentals in areas like these. There will always be demand for inner-city properties. You’ll never struggle for tenants, and you’ll be able to charge pretty high prices.
But, there are downsides, too, like the fact properties cost more. What’s more, operating in a city means going up against competition. And, life as a city landlord is far from easy. If you operate in a busy area, you can expect to be busy yourself.
By comparison, landlords who buy properties in less popular areas stand to reap benefits. While you might not be able to charge such high rates, you stand to make money in other ways. And, we’re going to look at what they are.
Creating a market
When you’re renting property in inner-city areas, you’re just another name on the market. But, when you buy real estate in more remote locations, you ARE the market. That means you don’t have to fight and compete when it comes to pricing. More, you can create your own pricing methods, and there’s no one in place to tell you that you’re wrong. You can create and control demand, and you will always be in the driving seat. As a result, you may actually find that you can charge higher prices in less commercial areas. With less choice, your tenants will pay regardless.
Even if you can’t quite garner the rent rates of the city, you still stand to make more money further afield. Why? Because overheads are guaranteed to be lower. With demand comes high property prices upfront. Hence, it could be years in the city before you break a profit. Properties in less dense areas, however, cost a whole lot less in the first place. So, even with lower rental rates, you could see a profit much sooner on your landlord journey. If you’re in a rush to break even, then, getting out of the city is the way to go.
More chance of increasing value
If you’re wise with where you buy, there’s also a much higher chance of increases in value out of the city. Inner-city areas can only develop to a point. It’s unlikely there will be any significant increases in the coming years, aside from normal inflation. If you’re lucky enough to buy in an upcoming area, though, you could see substantial increases in rent and value. As such, it’s worth looking into any future building work before buying anywhere. Things like new developments, supermarkets, or even new town centers are fantastic news. In no time, your house could more than pay for itself, as well as doubling in value. Take that city landlords!
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