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Investing in small towns. Good or bad idea?

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Nirvana65 | 07 Nov 2014, 09:53 AM Agree 0
What’s the pros and cons in investing in a home in a small town like Sudbury? Is it worth it? The big cities are now SO expensive!!!
  • InvestorDave | 07 Nov 2014, 01:37 PM Agree 0
    You have to look at the stats in these places to determine if the rental market is strong enough to sustain your investment. As with any investment, due dilligence is crucial.
  • InvestJ | 11 Nov 2014, 02:10 PM Agree 0
    Where can I find these stats and information as a first-time investor. Where should I get looking?
  • alexiscooper5 | 21 Nov 2014, 05:47 AM Agree 1
    Investing into small cities is very good idea. Day by day population increases and Small City's grow very fast. In Small city's there is no risk of property but in big city investment is more and earning is good but risky.
  • Nirvana65 | 24 Nov 2014, 11:14 AM Agree 0
    I’m hearing the similar things about smaller markets. Do you have experience doing this? If so where? Just looking for a good market with high return value.
  • GPanko | 24 Dec 2014, 09:42 AM Agree 0
    Be very careful in a small market. There is a good reason the big 5 banks won't lend for commercial property in cities with populations under 20,000. If a major employer leaves the market and population starts to leave, you can experience extreme vacancies, not to mention a very limited pool of buyers when you wish to sell.
    Large cities and city centres are much less risky, however your cap rates will be lower. Some small cities can experience ridiculous growth and very high cap rates, but just keep in mind, they will be more volatile and you may not be able to sell when you want to. It's not unlike penny stocks vs large cap dividend paying companies. Anyone with a little experience will tell you to stay away from the small stuff because it's not investing, it's speculating.
    If a financial institution won't lend to you in a market, realize they probably won't lend to the next guy trying to buy this property in the future either.
  • Alvin | 29 Dec 2014, 06:21 AM Agree 0
    Let me list some of the good points first.
    Benefits of Investing in Small Towns
    * Properties can be significantly cheaper than in larger, metro areas.
    * There is often less regulation.
    * There is often less competition.
    * That small town atmosphere can be pretty tempting.

    Drawbacks of Investing in Small Towns
    * These can be much tougher markets.
    * Lack of economic opportunity can restrict your pool of qualified renters or buyers.
    * You will be doing a lot of driving to show, check on and maintain your properties.
  • Jill | 29 Dec 2014, 10:05 PM Agree 0
    All good comments. I think small towns are a good investment if you can see economic growth. Ontario's main economic engine is the Automotive Manufactures, so if you can invest in areas with growth in this sector I would say it's a good idea. For example Woodstock Ontario went thru huge real estate growth as soon as Toyota news release back in 2005. Similar to Alliston Ontario when Honda expansions were released. Another smaller sector would be our aging demographics. Ontario is seeing a large swing into the baby boomers retiring. A good example of this it the <A HREF="">Collingwood Real Estate Market</A>. Collingwood is becoming a huge location for retirees. Retirees are spending their money on quality of life.

    So to sum this up economic growth means real estate growth.
  • alexiscooper5 | 17 Jan 2015, 04:24 AM Agree 0
    The return value of small market is higher, if the grow of the city is fast.
  • NorfolkNick | 30 Jan 2015, 11:55 AM Agree 0
    I own investment properties in small towns like Port Dover and Simcoe in Norfolk County (Southwest Ontario - Lake Erie area). These can be challenging investments. What attracts me is the low entry price. I was able to acquire multi-family/multi-unit properties in the area which guarantees a consistent cash flow. The actual properties don't grow in value the way they would in a major urban market but you'll always find healthy positive cash flow on a day-to-day basis in these areas.

    If you're looking to buy, I would suggest staying in the "downtown" core of small towns. These would be the most desireable properties. - preferably prominent corners or streets. Be careful who you rent to as there is generally more unemployed, on-the-dole tenant pool. Pick a town that may be on the way to a larger town. I like Port Dover because while it's a booming tourist town in the summer, its main street is a quick drive to outer Hamilton where US steel and other work can be found. Many of my tenants want to live in a small beach town and commute from there.

    Also, know what rents you can get. Always make the tenant pay for utilities. Look for VTB, unorthodox lenders, local credit unions etc., as it can be challenging to obtain financing in these areas... especially mixed use (residential on top, commercial below). Good Luck!
    • Claudia | 01 Nov 2015, 12:38 AM Agree 0
      Hello, I'm looking to buy right downtown Simcoe, it is a duplex, my intention is to buy to rent both properties and live in one after 6 years - when I retire, would appreciate if you could please give me your impressions regarding the rents ( realtor told me I can ask for 1200 on 3 bdrm), thank you.
  • alexiscooper5 | 02 Feb 2015, 01:49 AM Agree 0
    Yes, May be it will be challenging for you.
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