You are probably familiar with 24-hour cities such as New York or Los Angeles, where the city never truly sleeps and people work around the clock. However, 18-hour locales are becoming more commonplace and offer some investment advantages over larger metropolises. For one thing, 24-hour cities are noisy and lack of sleep can be detrimental to one's health over time.
A dramatic increase in home prices in the gateway cities of San Francisco, New York, Los Angeles, Chicago, Boston and Washington, D.C., has driven millennials to more affordable but still urban locations. Popular places include Denver, Portland, Seattle, Nashville, Atlanta, Salt Lake City and Orlando.
Because the cost of living in 18-hour cities still isn't as high as in some of the more populated areas of the country, investors can get in on real estate for a fraction of the cost. This is especially important if you're a new investor or have a smaller budget. There are many reasons 18-hour cities have great potential.
Lower Business Costs
The cost of doing business in these secondary locales is about 16 percent lower than primary markets. Companies save money on operating costs, but also retain access to a big population. Investing in real estate in a secondary market makes perfect sense for entrepreneurs looking to save a little money. They still gain access to new customers and a wide pool of potential employees.
Affordable Housing for Employees
Younger workers may be more than willing to relocate for the right job, making 18-hour cities even more attractive for investments. Because the cost of housing is lower, people are more inclined to consider a move from where they are currently located.
However, keep in mind that the average worker doesn't stay in the same job their entire lives anymore. Investing in residential real estate in an 18-hour city is a smart move, since you can easily rent to a young professional or family for a profit.
If you're looking for a fixer-upper investment, check the areas surrounding these growing regions. Even in an 18-hour city, it is probably best to consider the outlying areas where you might purchase cheap, fix up the property and list it for a profit.
Thoroughly study trends and look for neighborhoods where home prices are still affordable, but there is a lot of renovation and rising home prices. This step is crucial, as investing in a property or location without careful calculation can cut into your potential profits.
Rising Value of Real Estate
Millennials are moving to 18-hour cities in droves, and they are currently the largest-population generation over 18. Therefore, the cost of real estate in cities such as San Diego, Austin and Denver keeps increasing. This presents an option for investors where they can buy low and quickly turn a profit.
In addition to the rising values of homes and office buildings, rental prices are also on the uptick. In 2017, the average suburban rental rate was actually $50 more expensive than the average urban rent. Those who are interested in property management or being landlords have an opportunity to earn money by buying and leasing.
Plenty of Amenities
18-hour cities offer many of the same features as huge 24-hour cities, but with less headache of overcrowding, higher costs and noise. Some of the things provided in a thriving second-tier location include a rich nightlife, plenty of activities during the day, sports teams, and rich culture through museums and organizations.
Most have places for healthy activities, such as biking and walking. You'll also find access to public transportation and smart city features that rival what's offered in first-tier cities.
Future Growth for Secondary Cities
Future growth trends seem to point more toward 18-hour cities scattered across the country. When given an option between a job a few hours away from family and one on the coast, millennials are choosing to stay closer to home.
The increase in real estate value and people moving to second-tier places doesn't see any signs of slowing down, so this is a smart investment for anyone looking to buy property in an 18-hour location.