There are several indications that small towns and rural areas are making a comeback in several ways, especially in light of recent global events.
The COVID-19 pandemic has significantly shifted the way we work, with many companies moving to a remote or hybrid work model. This change allows employees to live anywhere with a reliable internet connection, and many are choosing to leave crowded and expensive cities for quieter, more affordable small towns.
The cost of living in major urban centers has been on a steady rise, making it increasingly difficult for many to afford. On the other hand, smaller towns often offer much more affordable housing options and a lower cost of living, attracting individuals and families looking for financial ease.
Small towns often offer a slower, more relaxed pace of life, which many people find appealing. The close-knit community, less crowded spaces, lower crime rates, and the opportunity to connect more closely with nature can enhance the quality of life.
There is a growing trend of urban-rural migration, with people moving away from cities to more rural areas. Factors such as overcrowding, pollution, and the high cost of living in cities are driving people towards small towns.
The digital revolution has made it easier for businesses to operate in small towns. With a solid internet connection, entrepreneurs can run online businesses, offer freelance services, or establish startups without needing to be in a large city.
However, it’s worth noting that the revival of small towns comes with its own set of challenges. Access to healthcare, infrastructure development, education, and employment opportunities might not be as plentiful as in larger cities. But with concerted efforts from local governments, businesses, and residents, these hurdles can be overcome, and small towns can continue to thrive.
PROS
Investing in new affordable housing in small towns can offer a wide array of benefits, depending on the particular context and the investor’s goals. Here are some factors that might make small towns a good option for affordable housing investments:
Generally, property prices in small towns tend to be significantly lower than in major urban centers. This lower cost of entry can make it possible for investors to purchase properties outright, reducing the need for financing, and potentially leading to higher profit margins.
Smaller towns often see less competition from other real estate investors, giving those who do choose to invest more options and potentially better deals.
Like larger cities, small towns also experience a demand for affordable housing. In fact, in many small towns, there is often a gap in the market for quality, affordable housing options. Filling this gap can provide a steady stream of rental income.
Small towns also have opportunities for small pockets of tiny houses, park models, and other types of housing to be opened at lower costs and fewer regulations to overcome.
If a small town is located near a growing urban area, there could be potential for property values to increase over time. Likewise, if a small town is experiencing economic growth due to new industries or businesses moving in, it could also lead to a rise in property values.
CONS
Smaller towns may have a smaller pool of potential tenants, which could lead to longer vacancies. If a significant percentage of the population owns their homes or if the town’s population is declining, demand for rental housing may be limited.
Small towns often have economies that are dependent on a single industry. If that industry declines, the town’s economy could suffer, leading to job losses and potentially affecting your ability to find tenants who can pay rent consistently.
Small towns may not offer the same level of amenities as larger cities. This might affect the attractiveness of your properties to potential tenants.
In summary, while small towns can be a good investment for affordable housing, they aren’t without risks. As with any investment, thorough research and due diligence are vital. It’s also beneficial to consider working with local real estate agents or consultants who are familiar with the local market and can provide insights on potential opportunities and challenges.
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Gary Fleisher, the Modcoach, author
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