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Regional Property Investment: Challenges and Opportunities

When starting out as a property investor, many people will look to buy property in the big cities – usually in the ones they live in.

Investors often believe that property in metropolitan areas is a more lucrative venture. 

But there is plenty of appeal in investing in rural property!

Rural real estate investing should be a worthwhile consideration for any investor looking to avoid the competition and massive price tag of property close to cities.

Let’s take a deep dive into some of the challenges and opportunities on offer when it comes to real estate investing. 

The Challenges 

Lack of Demand 

Most of the challenges involved in investing in rural property will come back to one aspect: renter appeal and vacancy rates. 

It’s important to understand some of the factors of living in regional areas that may mean there aren’t as many tenants readily available, which could have an impact on cash flow generated through the property. 

Many people still do want to live close to cities, seeing it as a more accessible way of living, with direct access to more services. 

Relocating to a remote area usually involves adjusting to a new way of life, which definitely isn’t for everyone. 

This is something to think about when investing – are you looking to buy in a location where you’ll still be able to ensure rental income and vacancy rates are manageable? 

Unreliable Climate and Weather 

There are plenty of natural risks to consider when investing in property.

These locations are usually more prone to natural disasters, such as floods and bushfires. 

This can present a risk to your investment property, property value and tenant appeal.

Services and Facilities are Limited 

Limited services in regional areas can be a major factor that impacts demand related to investment property. 

Access to services and facilities like public transportation, hospitals, shopping centres, and schools will be a big draw card for people looking to rent.

Not having easy access to these services can be a big deterrent for people looking to live in these areas.

It’s worth doing a stock take on the different services and facilities available in any rural area that you’re looking to invest in.

Laws and Regulations 

It’s definitely important to take into account the local laws on investing in regional and rural real estate.

Of course, it’s always a good idea to be aware of the property investment related legislation and regulations whenever you’re about to invest.

But because these laws and regulations can change region to region, you need to be aware of the different rules in that particular area. 

Make sure you’re aware of the challenges to investing in the particular regional area you’re looking to invest in so that you can avoid any potential legal risk. 

But now that we’ve gone through some of the challenges when it comes to investing in regional property, let’s look at some of the opportunities!

The Opportunities

Lower costs

The big advantage to investing in rural real estate is the lower costs when it comes to purchasing a property. 

Real estate in regional areas is usually much lower compared to urban areas.

This means that the money you have to invest in property can usually go a lot further – a two bedroom apartment in the city may get you a multiple bedroom house in a regional area. 

Positive Cash Flow

Cheaper property also means more affordable mortgage repayments. 

Yes, capital gains may not be as great, but the money you save through lower mortgage repayments will mean greater cash flow.

This can be directed towards other property, personal costs or renovations.

Economic Stability 

Investment properties in regional areas can often afford a more stable environment and long-term consistency.

This is because properties in these areas aren’t as exposed to the impact of economic fluctuations and financial crises. 

So in times of economic instability, regional property investment can be a great way to minimise the impact of this risk. 

Alternative rental income options and business opportunities 

While there may be a lack of demand in some regional areas, there are always alternatives.

This can include leasing the property for vacations, which can actually provide a long-term income stream. 

Investing in regional areas may also open up alternative income streams. 

This includes business opportunities, such as developing agricultural and tourist projects or starting a commercial service for the local community. 

Rural properties may also provide an opportunity to utilise the land for farming crops or raising animals if self-sufficiency is a priority. 

The Bottom Line 

In the end, the decision to invest in regional property will depend on your circumstances, resources and priorities.

But the best regional property investments can be a great way to make sustainable, true wealth!

For an analytical breakdown of the regional property markets versus capital city markets, check out this video:

PK Gupta
Published: 10 May 2024


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