Feb
22
Why I'm Investing in Rural Properties and Why You Should Too.

Why I’m Investing in Rural Property and Why You Should Too



Are you looking for a different way to invest in a rental property? An often-overlooked option is going the rural route. While there may be thousands — even tens of thousands — of investors competing in a big city market, consider going a little bit country.



Now, with any real estate investing, especially with rental properties, there are risks involved. Let’s dive in.



The Nitty Gritty of Rental Property Investing



Before considering a city or rural property purchase, here are some crucial details:




  1. House condition — Depending on your finances, purchasing a home that needs work may cost more than it's worth.

  2. Property taxes — Rural property taxes are often much lower than city taxes, so that may change your options.

  3. Neighborhood — Location, city or rural, is a critical factor for your investment; not only for access to essential services and establishments but also enriching local activities.

  4. Property management — This decision can be an even bigger factor if you don't live near the property.

  5. Unexpected costs — Regardless of where the house is, there will always be unexpected costs involved with rental property.



Land Options



If you're seriously thinking about rural property, there could be a choice between vacant, undeveloped land, or a property with a home already onsite. Millionacres.com stresses the importance of researching the property and the area. If you are considering an empty lot, know if you want to develop it later, and the options you have while taking into account the "neighborhood restrictions, easements, running utilities, septic systems, getting supplies to the location, and future appreciation." If you’re dreaming of building a multi-family dwelling without understanding the restrictions before you buy, you could not only be in for a big disappointment but a massive financial loss as well.



Buying Rural vs. In The City



Here are a few advantages to rural over a city property:




  • Less competition — Especially if you're investing in foreclosure auctions or a neglected property that needs many repairs.

  • Lower out-of-pocket costs — Average home price in U.S. urban areas was around $269,000, while it was around $170,000 in rural areas around 2016.

  • Lower property taxes — Typically, rural propert




    y taxes are lower than in a city, which helps reduce your operating costs.



Of course, investing in rural property offers unique risks. For example, if the local economy fails, you may be stuck with a property you can't rent or sell. Plus, fewer people are moving in and out of rural areas. Fewer housing turnovers could mean fewer people moving at any given time. In addition, hiring a property management company, or contractors to do various work on the property, could be a challenge.



Gathering the Facts



Because multiple factors affect your potential rental property, it's even more critical that you know what you're getting into when diving into a rural property. Realtor.com advises not only talking to your real estate agent but also talking to locals. Find out about roads, property owner responsibilities, conditions in inclement weather and harsh seasons, etc. Also, check with local officials about trash regulations and land-use rights.



In addition to researching potential rentals and regulations, you may want to set yourself up as a limited liability company (LLC), especially if you plan on having tenants living in your home(s). An LLC will grant you tax advantages and flexibility, and your personal assets will be protected in the event of a lawsuit. There are five steps to complete when forming a Utah LLC, it’s easiest to let a formation service handle the process.



Now that you've got some pros and cons to the rural investment property market, it's time to decide which is for you. If you’re thinking about investing in a country home, there are many opportunities.



Precision Realty can handle all your Utah County, Greater Salt Lake area, Tooele County, and So. Davis County Real Estate needs. Call (801) 876-0677 or complete this form!



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