Real Estate

Investing in the real estate market may seem like an unreachable goal for the average person, and this is likely because of the emphasis that the media places on purchasing “high profit” urban homes and land. In order to invest in metropolitan areas, it is usually necessary to be willing to borrow hundreds of thousands of dollars. However, there is another market out there, and it is an investor’s dream. This article will discuss the possibilities that lie within the world of the rural real estate market.

Just outside of the busy cities of America lie tiny rural towns that make up much of the nation’s population count. Because of the lack of competition between buyers in these areas, the real estate prices are extremely low. For example, a home in Dawson, GA, a quaint small town in southern portion of that state, with two bedrooms and one bath in a decent neighborhood can sell for around $25,000. These homes aren’t run down. Many have been recently renovated. The fact is, there is simply no competition whatsoever in cities like these, and therefore a buyer can take advantage of outrageously low prices!

Now, while the buyer competition may be low, there is an outpouring of rural citizens who are looking for rental property at decent prices. That same $25,000 house in tiny Dawson, GA, can rent for about $350.00 to $400.00 a month. With that kind of return, you can quickly earn back your renovation costs and start turning a profit. However, keep in mind that local renters will quickly recognize when a landlord is marking up his rental price too high to create a greater profit, and this will not be taken lightly. Small towns are all about reputations, so build one for yourself as a fair, honest rental property owner to ensure that your properties remain actively rented. The reason that these small towns can produce easy and constant rental income is that there is usually a shortage of respectable homes in these areas, especially in the Southeastern portion of the United States. The key to being successful in this real estate venture is to look for beautiful small towns, preferably with a population of 20,000 or less (make sure to take county population into consideration as well) that have a lot to offer your renters as far as conveniences and entertainment go. These busy little hubs usually attract renters from all over. Then, look for a home that needs a little bit of minor restoration. The point is to find a home that basically only needs cosmetic restoration, as these little changes can greatly increase the rental value of the home (while at the same time allowing you to pay a lower mortgage price due to these needed repairs at the time of purchase). If possible, use the profits from your first rental property to save for another home. Pretty soon, you will find that you have a full-time income through your rental properties with just a handful of investments that will quickly be paid off. If planned out carefully, this is a win-win situation. Citizens of rural areas will be able to enjoy your beautiful homes, and you will be able to sit back and watch the income flow in.

My personal story on how I bought and sold a home in this market is not exactly atypical. My family was expecting a third child – a girl this time – which made the house I sold much too small. For my wife and I and the two boys, a two bedroom rambler was tight, but livable. But when the girl came along, it was much too small. So, even in this market, we went looking for a new place to call home.

Soon, we found a place. With five bedrooms and a nice yard, it was perfect. However, we could not afford to own two houses at the same time. We quickly put the rambler up for sale.

Did I mention the rambler had been hit by lightning the previous spring? After six months of insurance problems, fixing, and re-fixing all the problems caused by the lightning had been resolved to the tune of $43,000. So the house had new paint, new light fixtures, new ceiling and new electrical wiring. At the time I went to sell the house, I though this might be a wash in terms of desirablity.

However, it increase the attractiveness of the house (and because it really was a first time homeowners house) we followed the advice of our realtor and added a home owners warranty. What this did was product the buyer for a year for any leftover electrical problems.

In the meantime, we took a second mortgage out on the house we owned in order to buy the house we wanted to buy. At this time point, I have got two mortgages with a serious urge to get one of them paid off. Each month that I did not sell the home would cost me an extra $1400. So one could call me a motivated seller.

While the bank wanted me to sell the house for the market value it was appraised at, my realtor told me that this was last years value and that I had to be realistic in what I expected due to the current market conditions. After a small amount of research in current selling prices, I followed my realtor’s advice and priced the home slightly under what other houses in my neighborhood had sold for.

Within the first week, we had our first offer. We chose to decline. It was significantly under the price I had already set slightly lower than market value. In the second week, we had two solid offers. We allowed the two potential buyers to play off each other and they managed to bid up the price a little bit. We sold the home and a few weeks closed on the home.

The moral of the story: In this market, be realistic. Do not expect last years selling price. Finally, find a realtor you can trust and listen to him.