Living and working in a small town is totally different than doing the same in a big city — especially if you’re trying to make your living as a commercial real estate investor. The associated risks are higher in smaller communities, but if you make it work for you, the rewards can also be greater. How can you make commercial real estate work for you in small towns?
The Risk of Commercial Real Estate in Small Towns
We all love the idea of living in a small town where everyone knows who we are. Away from the hustle and bustle of the big city, these niches give us shelter and peace that we couldn’t find otherwise. Unfortunately, for anyone specializing in commercial real estate, these places can be both a blessing and a curse.
A lack of economic development can make it difficult for you to find qualified tenants for your properties. If you do find someone qualified, it can take much longer to rent out your spaces. Even showing your property can be a pain, especially if you haven’t made the small town you’re investing in your home.
You might find yourself travelling hours one way just to show off a storefront or business with no guarantee that it will result in a rental or lease agreement.
Don’t let these risks scare you away from investing in commercial real estate in small towns. How can you make these unique locations work for you?
Working in a small town isn’t like managing commercial properties in a big city, but it can be an excellent place to make your mark. You don’t need to focus on big-ticket sales or leases to be successful. In fact, 85% of commercial real estate transactions are for properties under $2 million.
In a small town, the majority of the companies that you work with will be considered small businesses, so you’re not going to assign them a number and file them away. You need to take the time to build relationships with local enterprises and property appraisers.
These relationships will help you stay on top of leads from both sides of the industry. Some businesses will be looking for a new storefront, and properties available for purchase can help you strengthen your portfolio.
Communicate With Previous Clients
One of the best things about living and working in a small town is that everyone knows everybody. You can walk into the grocery store or the local coffee shop and be greeted by name. Communication is a major component in the success of these communities, and it will play a vital role in your success when dealing with commercial properties in the area. Stay in touch with previous clients.
Find out how they’re doing and how you can help them succeed. You may find that when a small business starts to thrive, it needs to upgrade its storefront or relocate to keep up with customers’ demands. Instead of letting them seek help from another real estate agent or commercial property investor, stay in touch. That way, you’re the first person that comes to mind when they need something new.
You don’t need to call them every day, but sending a fruit basket on the anniversary of opening their business or a gift for Christmas is a thoughtful gesture. It will keep you top of mind if the company needs to relocate.
Track Regional News
While everyone in a small town talks to — and about — everyone else, word-of-mouth isn’t always the best way to stay on top of commercial property trends. Make it a point to keep track of regional and local news for the areas you’re investing in. It sounds like common sense, but if the city is breaking ground on a new commercial complex, you’ll want to be the first to know so you can leverage the opportunity to your benefit.
Invest in local newspaper subscriptions and make friends with the reporters. You might be surprised what information a journalist is willing to offer if you’ve taken the time to foster a professional relationship.
Managing Commercial Real Estate in Small Towns
If you put the work into communicating with former clients and fostering professional relationships, a small town can be a phenomenal place to invest in commercial properties. Don’t treat small-town holdings like you would in a bigger city.
The profit margins may be slimmer, and the risks are greater, but with great risk often comes great reward — as long as you’re willing to put in the work.
Small towns are a totally different animal when it comes to real estate and commercial properties. Don’t let the risks scare you away. These little slices of hometown America all have small businesses that need homes.
Holly Welles is a freelance writer with experience covering commercial real estate for publishers like Propmodo and Modlar. She also maintains a personal real estate blog, The Estate Update. Find more of her industry work on Twitter.