The Money Mustache Community
Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: ketchup on June 17, 2014, 11:16:29 AM
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This more of an absorbing-knowledge researching process than a taking-action one.
The GF and I are talking about options for where we want to live over the course of our lives.
Let's say we want to live somewhere really wacky like Caribou, Maine for a number of years.
Population: 8,189
Cost of 1400sqf 3-4bd house: $60k
Annual snowfall: 111 inches
Would this be a sane place to build out a small real estate empire (for FIRE purposes)? How would I go about figuring this out? The rental market seems pretty sparse, but it is a smaller city, so less of everything in that respect.
The numbers look pretty good from what I can see (3 bedroom house rents for $850/mo, but it's hard to find info), but logic tells me that my concern with a smaller city would probably be vacancy (fewer people overall, so it takes longer find tenants). I have no idea how to quantify that.
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My understanding of the economy in Maine is that most of the industries are in decline and unemployment is high. This is not the type of market for real estate investment I want. I want to see a growing economy that is relatively diverse, low unemployment, and rising rents and property values. Easy to rent, rents will increase, and if you decide to sell, a strong market of buyers.
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I don't know anything about where you are looking in Maine, but I have two uncles that have owned rental properties outside of Topeka Kansas for nearly 20 years. Topeka is bigger than what you are looking at but the rentals are about 30-40 miles outside of Topeka and surround a small town that is probably around the same size as what you are looking at. They have both mentioned over the last several years that their vacancy has been growing longer as fewer people can afford to live in their properties and drive into Topeka every day for work. These are lower end properties that I believe rent for $400-$500 for a house. That would be my biggest concern for investing in smaller towns-is there access to jobs and income to give you a constant pool of tenants? If there's not a very big pool you may have to lower your standards to find a tenant and then you may have to lower your standards to keep someone in the property (You don't have rent this month? I guess skipping this month is better than kicking you out and taking 4 months to get another tenant in). Although, with it being a small town, everybody knows everybody else's business so you can keep tabs on your tenants very easily.
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I think a college or university town is a good bet. It's usually a fairly large employer and a steady stream of people needing to rent. Same thing owning near a hospital (good employee base).
I, too, would like to find the sort of town you're describing.