When you buy and investment property to flip in a rural, tertiary market, prepare for the unexpected. These forgotten markets can be incredible investment opportunities, but you must understand that you are playing on an entirely different field and often radically different rules. If you plan for the unexpected, you could win big.
#1: Use the Rehab Budget Wisely
In rural markets, the comps may not support high-end finishes, so don’t do unnecessary upgrades. This starts with the exterior of the home where you may find dirt or gravel driveways and no sidewalks. Don’t spend a ton of money pouring a concrete sidewalk or upgrading the driveway if it is not an added value feature. You can use pavers for the sidewalk, which will save thousands of dollars. Use nice, but minimal landscaping. Elaborate landscape plans could be seen from the cost of upkeep rather than an improvement. It is better to hint at the potential of the possibilities with minimal but effective landscaping.
In the kitchens and baths consider using vinyl plank flooring and laminate countertops as opposed to stone surfaces and wood floors. It is unlikely that you will find a buyer willing to pay for those upgrades. Resurfacing existing tubs rather than replacing them will certainly help with the budget.
Staging the property is critical and will determine how long it sits on the market. Even way out in the country, people can be wowed by staging. One simple trick is to put smaller beds than the room can handle to make the room seem larger.
#2: Expect the Unexpected
A large chunk of your budget will go toward fixing underlying issues that, when repaired, will not be seen. Many of these houses do not have access to public sewer or water options. They may have a septic system for sewage disposal and a well or community co-op for water service. These can be significant expenses if you are unfamiliar with the local and state regulations and codes. Be sure to research how these service restrictions can limit certain features or upgrades that you may want to do.
Because of the geographical location and lower populations, everything will cost more than you think and take longer than you imagine. For example, it can be difficult to even get an estimate from a contractor because it could take them 2 hours to drive to the property.
#3: Learn the Local Lingo
Day one, find the best realtor in that area as they are more likely to know the local rules, community eccentricities and which improvements work, and which one do not. They can help find local contractors and they may have to be your eyes and ears for the project if you do not live close to the project.
Navigating local customs is critical as breaking these “rules” can kill a deal. For instance, if you need to put “No Trespassing” signs on the trees around the perimeter of the property, you may have to paint a purple line above and below the sign. Why? Because you cannot cross a no trespassing sign surrounded in purple. Who would know that! The locals, that’s who. So do not underestimate local customs.
#4: Facebook Groups Are A Great Place to Find Buyers
Join local Facebook groups as soon as you acquire one of these properties. Look at what properties are being listed in the group. You can also ask for recommendations for contractors or tradesmen.
Ultimately, investing in tertiary markets can be challenging, but if you take the time to research the variables, you can walk away with significant profits.
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