Small Town Real Estate Flipping Potential

Written by Marc on March 28th, 2009

smalltownrealestetflip When people talk about real estate investing, quite often they are either talking about residential or commercial real estate in larger centers.  That makes sense as these larger markets have the largest amount of real estate inventory and therefore give any investor many options as to where to invest their money.

But, I would like to talk about an overlooked real estate market: small towns.

Now, I want to mention right here that I consider small town real estate investing to be concerned with investing in centers that are within a reasonable distance from a larger city.  This distance will depend on the part of the world that you live in, but pick something reasonable – for example, out here on the Canadian prairies, an hour drive would be about as far as I would go – so about 100kms.

The reason that I would take my dollars out of town (so to speak) is that there is a good chance that I can make a good return on my investment by flipping a property in a smaller town.  There are many people that would like to live close to a big city, but enjoy the safety and friendliness that a smaller center can offer, and that is where you step in.

Just like any other flipping project, you buy low, sell high and pocket the profit.  You can benefit from the fact that a lot of investors don’t consider looking outside of cities, and quite often you can negotiate a good purchase price and terms that are more accommodating to your flipping needs.

When it comes to selling your property, you want to highlight the short commute to the nearest city, the quiet, crime free atmosphere of the neighborhood (where applicable) and the more reasonable price that they can get by buying out of town.

Usually, you want to set your price under the assumption that they are going to make an offer under the asking price, but that would allow you to achieve a good ROI on your investment.  Just bear in mind that sometimes properties that are out of town take longer to sell than similar properties in a city, so ensure that you have enough finances to carry the property until it is sold.

Though this is by no means a complete guide, it is something that you should consider when flipping properties – with low competition, favorable terms and good ROI, they can be an effective cash-generating method.  In a later article, we will take a deeper look at risks and considerations when investing in small town real estate.

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