Buying an investment property isn’t an easy fiat, especially if you have a particular goal in mind. If you are looking to have long-term tenants, people who are willing to sign long-term agreements with you, your preferred choice of investment property should be in the suburbs. For landlords looking for more elite and family-oriented tenants, the suburb is the most prudent decision. However, like everything else, it has a downside. There will be a small pool of tenants to choose from as well as an increased vacancy rate. Let’s check out the pros and cons of buying an investment property in the suburbs to make a better decision.
Pros Of Buying Investment Property In Suburbs
The most significant advantage of buying an investment property in the suburbs is the turnover rate. Most tenants in the suburb are with kids or family-oriented, hence they prefer to stay longer in one place. Compared to party animals and workaholics of the city center, tenants in the suburb are looking for a peaceful and permanent place to dwell. Their goal is to look for a property that they can rent for a tear or more, or buy a house altogether.
Most of these tenants are with kids who want their kids to have an established home and safe environment to grow in. Most suburbs come with amenities that a family with kids would enjoy and take benefit of the most like schools and parks.
Compared to a city house, a suburban house comes with a larger space. You can bring up a family in peace in a suburban home. This is the reason why tenants love the suburbs. As for the investor, the prices of suburbs are lower as compared to the city so that you can buy a bigger space at a lesser cost than the city. In the city, you can get a 450square foot space in around $400,000, while in the same city, a house in suburbs that is around 2000 square foot will cost you $400,000. The downside, the rent rate in the suburb, is lower than the city, but you do get long term tenants.
Wear/Tear And Moving In And Out Damage:
The beauty of long-term tenants is that since they will be living in the house for more than a year, they consider their own place. Hence they treat the property with the same love and care as they would treat their own house. Due to this, there is less damage and wear/tear when it comes to renting out a property in the suburbs. Apart from that long term tenants also mean that there will be less end of term inspection, less moving out and in and less hassle of finding better tenants.
Compared to the city, the suburb poses less threat from external forces. The crime rate is lower than the cities, hence tenants with families are more willing to buy and rent in the suburbs rather than in the city. The reason for less crime rate in the suburb is the fact that people are more connected, there is a feeling of community and security in the suburb and also that people in the suburb look out for each other and intruders have lesser chance of sneaking in when the neighbors are keeping a vigilant watch. Most suburban neighborhoods have a neighborhood-watch system going on; this also keeps the community safe and secure.
Peace and Tranquility:
Another significant benefit of the suburbs is peace and tranquility. It’s the best getaway from city life. Suburbs are well secured and areas, they aren’t remote like rural areas, but have all the benefits of the city and the peace and tranquility of the rural side. Suburbs are the best getaway as they have the benefits of nature as well as city life.
With the suburbs, you get to enjoy the outdoors as well. Almost all properties in the suburb have yards, gardens as well as parks nearby. Imagine raising a family with a house that has a front and back yard both. This is why tenants with kids are so keen to buy or rent a house in the suburbs instead of the city.
As suburban areas are not cut-off or remote as the rural ones, they are easily accessible. You can reach the city in under an hour; the commute to the city is pretty easy. Whether you have a job in the city or just want to get there for entertainment purposes, you can within an hour and get back to your peace and quiet without any hassle. The easy commute is another reason why people with families are keen on buying a house in the suburb. Lower rent rate, bigger space, easy commute are all benefits that the tenants seek when renting in the suburban area.
Consistent Cash Flow:
Long term tenants mean a consistent and stable income. Also, suburban rents are known to have stable income sources; hence they are less likely to trouble you for rent payments.
Cons Of Buying An Investment Property In The Suburbs
Most of the suburbs are filled with single-family homes, so there is a matter of less or limited inventory when it comes to investing in the suburbs. There are two-family homes and townhouses as well, but single-family homes are dominant in the suburbs. There is a very slight chance of finding a multi-family building, condos or even apartments in the suburbs.
Investing in suburbs limits the renting pool to family-oriented tenants, senior citizens or people who are looking for a second home in a peaceful community. Apart from that, most people are looking to buy rather than rent in the suburb, limiting the renter’s pool.
The price of peace and tranquility is the low quality of entertainment. There are restaurants, café and theaters, but in a very limited quantity. If you want quality entertainment, you will have to head towards the nearest city, which may be an hour’s drive away.