There are hundreds of real estate listings that are posted online in many major cities hoping to attract the watchful eye of investors or regular home buyers. A large portion of the properties are located in metropolitan areas and might not be right for the average buyer. A buyer can sometimes ask is urban real estate profitable prior to making a direct decision to purchase a home.
What is an Urban Neighborhood?
The core area inside of city is known as the urban area. This is where the majority of a city population lives. Most of the homes are grouped into one area and subdivided by small streets. A variety of real estate exists inside the core center of most cities making these areas attractive as a rental home market.
Pros of Buying an Urban Home
1. Low Prices
2. Neighborhood Growth
3. Easy Access to Contractors
The cost of purchasing a vacant house in an urban core area is typically lower than values in more rural locations. Part of more affordable price is due to supply and demand. There are more homes packed into a smaller area inside of the city than what is found in the suburbs or more rural locations. Rent prices are sometimes lower although long-term growth is the key to profitable urban rental houses.
A large percentage of homes that house families inside urban neighborhoods were built for growth. Many homes were built with more than two bedrooms and appeal to larger families. It is not uncommon for multi-family home to be located inside the city limits. This provides a consistent source of rental income for an investor.
At some point in time, every house will require an upgrade or repair. Homes purchased in a rural location might be too far away from a general contractor and this can add to the repair costs. City neighborhoods are typically where independent contractors live and this provides easier access for property owners should a problem arise.
Cons of Buying Homes in Urban Neighborhoods
1. Above Average Crime Rates
2. Tenant Turnover
3. City Code Enforcement
The inner city in most urban areas has a higher than national average for more severe crimes. From gang violence to robbery, there are some parts of the urban core that do not make good investment areas for a property owner who prefers a more safe neighborhood to invest.
Turnover is one of the issues that any owner of a property must go through during ownership. Homes inside of the city can generally have a higher turnover partly due to tenant job loss, incarceration or short-term lease agreements. Property management through a third-party company to manage all tenant issues can curb high turnovers.
Building codes are often more strict inside of a city. City managers and officials have the right to close down an apartment building or evict a person from a property if public safety is an issue. Investment property owners who are not keeping up with repairs can be subject to code enforcement violations that can be expensive.
ROI for Urban Rental Homes
A rental house that is located within the inner city limits can be profitable if professionally managed. The JWB company is a national leader in turnkey real estate that includes property management services. A getting started guide can be viewed right on this page that will highlight the current returns for owned urban houses in the company network.