Purchasing investment property in the suburbs is a prudent decision for the particular type of investor, especially if you are more prone to find long-term quality tenants. Nevertheless, you are likely to have a smaller pool of prospective tenant and longer vacancies. Let’s dive deeper and investigate what the pros and cons of investing in rental property in the suburbs are.
Tenants consider the suburbs as a more permanent location than the city core. People who choose to reside in the suburbs usually are searching for more permanence than residents of the city centers. There are commonly looking to rent a property for longer than a year or buy a home. For instance, a young family with a toddler may seek a place in the suburbs so that their child is raised in a peaceful and tranquil setting and attend a good school.
In suburban neighborhoods, the price per square foot is usually significantly lower than in the city center. Consequently, you usually are able to buy more spacious property in the suburbs than you would be able to seize in the city for the same price. For instance, in Chicago, $400,000 can get you a 450 square foot apartment, while in the neighboring suburbs, this $400,000 could get you a 2000 square foot single-family home. Although the rent prices are lower than in the urban core, you are catering to a more upscale audience.
Wear and Tear
It is much easier to find long-term renters in the suburbs,- those who will enter the lease for more than a year. Since they intend to live in the property for a prolonged period, they perceive it as their own home. A long-term connection with the property frequently implies that tenants are more respectful of the property and generate less wear and tear.
Low Crime Rates
Suburbs usually have substantially lower crime rates than cities or urban areas. That is due to the various factors. The suburbs are generally more prosperous and more connected communities, where members look out for each other and timely spot the intruders. Safety is a significant concern for both renters and buyers. Suburban neighborhoods usually have a neighborhood watch- a system of regular local vigilance by homeowners to discourage crime, especially burglary.
The suburbs are a cherished getaway for busy business executives from the hustle of city life. In the same time, suburbs are not as isolated as a rural area where it could be hard to reach basic facilities and minimum entertainment. It is the perfect mix of nature and outdoors and the community of like-minded individuals.
In contrast to city living, the important advantage of suburban life is the abundance of outdoor space. It can be in all the shapes and colors: a green lawn in front of the house, a shared yard in a duplex, a full-scale garden in the back of the single-family home. This is an especially beloved amenity for families and tenants with pets.
Access to the City Center
Another benefit of the suburban lifestyle is quick access to the nearest city. Most suburbs are situated within an hour of a big city. This aspect provides suburban residents with access to the job market and entertainment venues they may desire. Suburbs are usually developed with the transportation needs of the residents in mind. They are supplied with an intricate system of roads, built in the proximity of interstates or even have stops of the rapid transit. The city normally can be reached by car or by the railway line.
Stable Cash Flow
Suburban single-family homes are often inhabited by several employed adults and consequently – several income earners. Hence, they might possess a larger budget to operate than single individuals.
Despite the fact that certain suburbs have local centers and plazas, the vast majority of properties in the suburbs are single-family homes. In certain suburban areas, you can also stumble upon townhouses and two-family homes. Large multifamily homes, condos or apartment buildings are even less common. The non-residential property also has very limited inventory.
Small Pool of Renters
In case you are a property investor who concentrates on rental properties, you should be informed that there are much fewer renters in the suburbs than in the city core. Suburbs are mostly populated by the homeowners. This does not suggest that nobody in the suburbs is searching for a rental. Similarly to the city dwellers, people in the suburbs are renting multifamily homes, apartments or single-family homes. Considering the fact that the renting population is a minority in suburbs, you should make a research and understand what tenants in the area crave so that you can purchase desired property or renovate your property to attract them. Keep in mind the suburbs is not just residential rentals, there are also opportunities to acquire and rent out office spaces or retail spots.
One of the big problems of most US suburbs is public transportation or lack thereof. For that reason, the suburbs are not that appealing for people who do not own cars. Public transportation is almost absent in most of the southern cities, the bus lines are irregular and the light rail is almost unknown. The situation is drastically different in the suburbs of North and North-West. Those areas commonly have a broad network of bus lines and a comprehensive system of commuter rail. Nevertheless, even in the Northern suburbs, it is crucial for those who don’t own a car to reside close to a railroad or bus line. Additionally, even for those renters who have means for transportation a remote property, distant from the main highways and far from downtown will be a huge turnoff, and they’ll probably choose the latter between suburbs or city. Such property should be vigorously marketed because the pool of renter for such property is even more limited.
Quality of Past-time
The peace and tranquility of the suburbs come with a price of the low quality of entertainment infrastructure. It can be quite boring in the suburbs, and all you can expect is a couple of restaurants, a strip mall, and a movie theater. The nearest theater, art exhibition or an interesting lectгure is in the hour drive in the nearest city.
Mariia serves as editor-in-chief and writer for the Rentberry and Landlord Tips blogs. She covers topics such as landlord-tenant laws, tips and advice for renters, investment opportunities in various cities, and more. She holds a master’s degree in strategic management, and you can find her articles in such publications as Yahoo! Finance, Forbes, Benzinga, and RealEstateAgent.