Suburban Real Estate Investing - The Advantages and Disadvantages Of Investing Away From Urban Areas in 2023
Real estate investors often find themselves drawn into big cities. However, recent years have turned the eyes of many investors over towards the appeal of suburban real estate.
While suburban real estate does not come with the same hustle and bustle as the city centre, they do come with their own unique advantages take make them an ideal location to buy in for certain investment strategies.
So, what are the pros and cons of suburban real estate investing? Let’s take a look.
However, before we dive in, you should know that lenders value different areas differently. So, in order to ensure you get the best available rate for suburban real estate as you would for big-city investments, click the link below for a free strategy call today.
The Advantages of Suburban Real Estate
Suburban real estate investors are capable of taking advantage of a variety of the key factors that make suburban real estate and living appealing.
These can include reasons such as:
Low Turnover Rates
It is uncommon for people to move into the suburbs without planning to live there long-term. Often you will find that suburban tenants view the properties they rent as a more permanent residence – especially when compared to renters towards the city centre.
Often you will find that the tenants looking to rent in the suburbs are young families and people with children who want to find a home they can call their own until they can afford to finally purchase a house. This results in drastically lower turnover rates.
Additionally, because tenants in the suburbs are often more inclined to view the property as their permanent or long-term home, they tend to be much more careful with the home, saving you money on renovations and maintenance.
More Spacious
Unlike the densely populated urban core, suburban real estate and neighbourhoods are open much more spacious. Additionally, the average price per square foot is often lower in the suburbs as opposed to within city limits. This means that you can buy more property at a more reasonable price than you would be able to in the city.
This helps contribute to the high demand for suburban real estate amongst families. The larger homes and yards provide the much-desired space they need for their family to play and grow together.
Regardless of whether you are buying a single-family or multi-family home in the suburbs, these properties are simply bigger on average then their inner-city counterparts.
Peaceful Neighbourhoods
Suburbs are often much more peaceful than cities or larger urban areas. This is due to a variety of reasons that help to create the quiet, tranquil atmosphere that the residents adore.
One of these reasons is the distance from the loud noise and businesses of bigger cities. Suburbs have significantly less traffic because of their distance from the large amenities that larger urban neighbourhoods often bolster.
As well, suburbs often have lower crime rates than larger urban areas. This is for a few different reasons, such as higher average household income and an increased sense of responsibility over the community shared between its inhabitants. Suburban residents often have more established neighbourhood watch groups. Additionally, homes in the suburbs often have security systems so regardless of whether your property has one installed, it is highly likely that the neighbours will have one that covers part of your property. Of course, including a security system with your property can still be beneficial for both you and your tenants.
Higher Cash Flow
While the cost per square foot is typically lower in the suburbs, the properties are often larger, resulting in higher overall property values. As a result, you are often capable of charging more in rent each month for your properties, resulting in higher overall cash flow.
This is excellent for investors who are looking to build a steady flow of reliable passive income each month to finance their lifestyle or further investments.
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The Disadvantages of Suburban Real Estate
Suburbs are not all sunshine and rainbows. After all, no investment is perfect. So, here are some of the disadvantages of investing in suburban real estate.
Limited Inventory
Suburban neighbourhoods are often very restrictive in terms of inventory. After all, since their residents typically stay for longer periods then their inner-city counterparts, it is less common for these properties to come onto the market. Additionally, while suburbs often have plazas and local retail centers, they lack the same amount of commercial real estate that cities often have.
Additionally, the majority of homes in the suburbs are typically single-family homes. This means that there is less variety in terms of properties to purchase. While these areas often have multi-family properties and apartments, the number of available properties will be significantly lower.
Smaller Pool of Renters
If you are investing in rental properties, you should be aware that the pool of renters in the suburbs is much lower. The majority of residents in the suburbs are going to be homeowners, so it will be more difficult to fill vacancies. However, if you do your research, good rental opportunities are often present.
Public Transportation
Due to their secluded nature, suburbs often lack public transportation. This means that rentals in the suburbs are often undesirable for individuals who do not own cars. Even if potential renters do have a vehicle, they may still not want to rent in the suburbs due to the need to drive everywhere.
Fewer Amenities
Unlike urban cores which are packed full of amenities such as movie theatres, malls, restaurants and other businesses and amenities, suburban areas often lack these amenities or have significantly fewer options. This means that anyone living in these areas will have to drive into the city in order to access these amenities. This can make the suburbs feel boring to people who enjoy the accessibility and activity of the big city.
Get Pre-Approved for Your Next Investment Property
Regardless of where you decide to invest, there is one tool you can get to make the process go smoothly and simply – a pre-approval. By getting pre-approved for your next mortgage by an experienced lender, you can be sure that you have locked in the lowest available interest rate and are securing the highest amount of funding for your next purchase.
Luckily for you, the agents at LendCity work with a wide array of lender to ensure that you get the best rate and financing from a lender who is best suited to you and your goals. So, if you are ready to begin, give us a call at 519-960-0370 or visit us online at LendCity.ca. Alternatively, click the link below for a free strategy call today.