Learn the pros and cons of investing in rental housing in the suburbs

Love them or hate them, the Suburbs are an integral part to the American housing market, and despite the surge in urban living that accompanied the housing recovery, suburban sprawl and the dream of single-family living is far from extinct. If you’re considering the purchase of a single-family rental in a suburban market, here are some benefits and drawbacks to consider before buying that white picket fence.

The Good

Lower cost for larger spaces

Land and square footage are much cheaper in the suburbs than in urban centers. In Downtown Chicago, $200k will buy a 900 square foot one bedroom condo. The same $200k investment a mere 28 miles West in Wheaton, IL will buy a 1400 square foot 3 bedroom, 2 bath home with a yard.

One household is likely to have multiple incomes

Larger home sizes attract couples and families who are more likely to have more than one person working full or part time. Larger incomes give property owners more leeway on the rents they can charge, without worrying that rent will become unaffordable.

Amenities likely to appeal to families

Amenities that are virtually unavailable in urban centers; big yards, extra bedrooms, room for children to roam safely, are part and parcel in most suburbs where ample green space and low crime rates are the norm. Also suburb is short for sub-urban for a reason, as most popular communities are within an easy drive to all the entertainment and culture a big city has to offer.

Longer term tenants

Americans require different housing situations for different stages of life, and when marriage, family, and children begin to appear in the lives of young American adults, a move to the suburbs is often the next step. Because moving to suburban communities often accompanies major life changes like marriage and children, families looking to rent in such places are often looking to settle down into a longer term lease. Suburban rentals will likely see lower turnover overall, though properties may be initially more difficult to rent than more transient units.

The suburbs are synonymous with family.

The suburbs are synonymous with family.

The Bad

Suburban rentals require more advertising

Suburban towns have a lot to offer in the way of community and culture, but the specific joys and amenities of smaller places are not often known to outsiders. Where a condo in an urban area will advertise itself based on common knowledge of a specific city’s culture, a single-family home in a suburb requires more targeted advertising. If you choose a rental investment in a small town, you’ll need to be well versed in the local culture and quality of life. Be ready to make rental listings that highlight good school systems, popular community events, public green spaces, and the quality of the home.

Limited variety in investment properties

Suburban real estate revolves around the single-family home, with limited opportunities to invest in duplexes, apartment buildings, condos, and retail space. A variety of architectural styles and ages of homes may be available depending on the age and development history of the town.

Fewer renters overall

Unlike big cities, where renters significantly outnumber homeowners, suburbs attract homeowners and first time buyers due to the lower cost of homes and land. A dwelling may take longer to lease in between tenants, but the trend toward longer term leases is a big plus here.

Families with kids and pets mean more wear and tear

Families who rent in the suburbs tend to think of their dwelling as more of a long term home and are generally at a more responsible stage of life than college students. However, people are usually drawn to less dense areas when they want to start families, so a suburban rental is likely to house kids and pets. Children and pets are hard on housing, so planning for the cost of accelerated wear and tear is a must.

Kids and pets are common residents of suburban rental homes.

Kids and pets are common residents of suburban rental homes.

Get to know the heart of the community

Before investing in a suburban rental property, take time to learn what makes the community great. You’ll be a step ahead if you choose a locale likely to appeal to your ideal renter.

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