Rural Homes: Good Real Estate Investment Opportunities in 2020?

Much has been written about rural America’s decline in the last decade. Rural homes were mainly left behind in the recovery after the 2008 Great Recession. As rural income stagnated, community banks closed, and access to capital dried up, young people left rural communities to pursue greater economic opportunities in urban areas. But, the spread of COVID-19 – the disease caused by the novel coronavirus – in densely populated metro areas is seemingly leading many Americans back to rural locations. Many people hope that distancing themselves in these rural communities would act as a shield against the coronavirus pandemic in 2020.

As a real estate investor, you might be wondering if this means that now you should invest in rural rental properties. As you already know, the investment location is the first factor to consider when buying a rental property. Some locations simply offer better investment opportunities than others. So, are rural areas good locations for real estate investing in 2020? Should you look for homes for sale in rural areas? Keep reading as we explain why exactly people are heading to rural America and the benefits of investing in rural homes for rent this year.

Related: Is Now a Good Time to Invest in Real Estate?

#1 Increasing Demand for Rural Homes

As mentioned, many people from cities where the number of coronavirus cases is increasing are fleeing to nearby rural areas. This is according to the CEO of real estate brokerage Redfin, Glenn Kelman. He told CNBC that demand for homes has shifted to rural areas as people look to move out of dense urban areas due to the effect of the coronavirus pandemic. He said:

“We have seen that people are more interested in that house at the foot of the mountains by the lake…Rural demand is much stronger right now than urban demand, and that’s a flip from where it’s been for the longest time, where everybody wanted to live in the city. We’ll see how it comes back, but there seems to be a profound, psychological change among consumers who are looking for houses.” 

This demand for quality and affordable places to live has never been more apparent. Moreover, it’s also easy to see how the US real estate market is inextricably connected to health outcomes. As a result of social distancing measures, more people are specifically looking to move to locations where they’re less exposed to crowds. Now, people are looking for single-family homes for rent in rural areas over a populous apartment building in a crowded city.

So where should you start your search for rural homes for sale? Mashvisor’s Real Estate Heatmap is a great tool to find the best rural areas to invest in. Simply enter your market of choice and the Heatmap will present a visual analysis of the different areas in the market. You can analyze the areas based on metrics including the listing price, rental income, cash on cash return, as well as Airbnb occupancy rate. You can further analyze different neighborhoods until you find one that meets your criteria the most. Click here to get started! 

#2 Quickly Increasing Rental Rates

The increasing demand for rural rentals in 2020 translates into increasing rental rates for rural properties as well. So, when it comes to making rental income and cash flow when investing in real estate during the spread coronavirus, buying rural homes for rent will prove to be profitable. A landlord or real estate investor can raise the rate they charge for rent based on factors like high occupancy rates and overall demand and, in turn, increase their rate of return on investment. As a matter of fact, research and data show that the rental rate is even tripling for rural properties in some locations.

Related: The Best Real Estate Investments During the Spread of the Coronavirus

This is the case for rural locations like the Hamptons and Hudson Valley. As wealthy New Yorkers flee the big city, they’re driving up the prices of rentals. In the Hamptons, this time of year is typically the off-season, with low rents and little demand. Now, however, some owners of rural rental properties are getting rates that are as high as asking rates for August. Rural homes that would typically rent for $4,000 a month during the winter and early spring are now going for up to $18,000 for the month of April. This is according to Delyse Berry of Upstate Down, a Hudson Valley real estate advisory and management firm.

“This is unprecedented…I have never placed so many people in rentals in one week, and at these prices, ever. Even in the summer.”

The huge demand and a contraction of inventory present a great investment opportunity for real estate investors in 2020! Most of the time, investing in a rural property requires you to pay less than half of home prices in a big urban city. The combination of cheap home prices and high rental income means you can expect to get a good ROI from owning rural rental property. But due to the little supply, you might be wondering how to find rural homes for sale.

Some sellers are pulling off their listing due to the COVID-19 pandemic, but there are still a lot of motivated sellers out there. Using Mashvisor’s Property Finder allows you to find the best rental properties for sale in your location of choice. Just set your budget, choice of property type, and other filters. Our tool will then show you a list of homes for sale in the US real estate market that best meet your criteria and promise a good return on investment.

To start using our Property Finder, sign up for a FREE Mashvisor account!

 

#3 Work as Traditional and Airbnb Rentals

Another benefit of investing in a rural property is that you can make money out of it by renting it out either as a traditional long-term rental or on sites like Airbnb as a short-term rental. According to brokers in the Hamptons, people are already looking for rural homes for rent following both rental strategies. Brokers say they have been getting calls from families wanting rental properties immediately, some to self-isolate for just two weeks, but some for up to a whole year. This tells you as a real estate investor that whichever rental strategy you prefer, both can generate good rental income and profits in 2020.

Which strategy should you go for? Seeing that long-term rentals are typically safer investments during a pandemic or a recession, we’d recommend them over Airbnb rentals. However, seeing as there’s still a demand for Airbnb rentals in rural areas from people who want to self-isolate and quarantine away from big cities with high numbers od coronavirus cases, a short-term rural home for rent could also be a good investment choice. In the end, it all falls back to the number behind the real estate deal you find. So to decide which rental strategy is best for you, use tools like Mashvisor’s Rental Property Calculator to analyze the traditional and Airbnb ROI for any property you find.

For more details on our tools and how to use them, read our guide: How to Use Mashvisor’s Real Estate Investment Software Platform during the Coronavirus Pandemic

Should You Invest in Rural Homes in 2020?

The effect of the coronavirus on the US real estate market continues to develop in 2020. However, it seems that owners of rural rental properties have become unexpected winners from the COVID-29 pandemic. Whether or not you should buy a rural home for rent depends on factors like your investment goals, financing, and the real estate deal itself. However, research and market trends show that rural homes might just be one of the best rental properties to invest in this year. And with the tools Mashvisor has to offer, you can always assure making the right investment decisions in no time.

Sign up for Mashvisor now with a 15% discount with promo code BLOG15 to start searching for and analyzing rural rental properties in the US.