Is It Better To Buy Urban or Suburban Rental Properties?

You can buy rental properties anywhere. From a secluded home in a rural county to a central townhouse in a bustling city. Typically, property managers like having rentals in high-demand areas, and both urban and suburban locations offer such demand. But is one area better than the other? Read on to learn whether it is better to buy urban or suburban rental properties.

The Urban Pros and Cons

Urban rental properties typically boast high demand due to their proximity to employment hubs, entertainment venues, and public transportation. Young professionals and students are particularly drawn to the convenience and lifestyle offered by urban living. This high demand can translate into higher rental income and lower vacancy rates for landlords. Additionally, urban areas tend to appreciate faster, which can result in significant capital gains over time.

However, urban rentals tend to have higher turnover rates, as most people don’t settle down in the city. You won’t have a problem getting new tenants, but you’ll have to keep up with a revolving door of occupants and applicants.

The Suburban Pros and Cons

On the flip side, suburban rental properties offer a more tranquil and family-friendly environment. Suburban tenants often look for larger living spaces, backyards, and quality school districts, which can command higher rents per square foot. Additionally, suburban renters usually are looking for long-term housing, which means you get more peace of mind and less work once you find reliable tenants.

However, it’s also worth noting that suburban homes are more likely to belong to homeowners associations (HOAs), which can be a double-edged sword. While they maintain community standards and property values, they also impose additional fees and regulations. You’ll have to decide whether owning a home in an HOA is worth it for you.

Considering the Cost

Cost is another crucial factor to consider when deciding whether it’s better to buy urban or suburban rental properties. Urban properties typically come with a heftier price tag due to their prime location. However, they also attract higher-paying tenants.

Suburban properties, although more affordable, might not yield the same immediate rental income. But they can offer more predictable, long-term tenants who prefer stability and are less likely to move frequently.

Decide Based on Your Investment Goals

Ultimately, your investment goals should guide your decision. If you’re aiming for high rental yields and rapid property appreciation, urban properties are likely your best bet. However, if you prefer steady cash flow with less volatility and better tenant retention, suburban properties could be the way to go.

As you make your decision, make sure you do your research, understand your financial goals, and choose the option that aligns best with your investment plan.