Local Income Properties Might Be the Dumb Choice

There’s an old saying that goes “all real estate is local.” While the wisdom imparted in that simple line is unassailable, it leaves out a very important point, especially when you consider that there are thousands of local markets and the reality might be that YOUR local market is the wrong one. Perhaps the right local market for investing is a thousand miles away. The bottom line is that it might be stupid to buy investment property where you live. Here are three reasons to ponder.

1. Daily Time Suck

Guess what the first and last thing you’re going to do every day if you live close to your investment property. Drive by it! Probably to an excessive degree. Don’t feel bad. You can’t help it. It’s human nature. You’ll be checking to make sure the tenants aren’t letting the grass get too long or cluttering up the yard with too much junk. When you live right down the block from an investment property, there’s a good chance you’ll be the crazy, stalker landlord. Don’t be the crazy stalker landlord.

2. Local Market is in the Crapper

The housing market is cyclical. What that means to the income property investor is that there is no reason to be satisfied with a local market languishing in the doldrums when you’ve got a whole nation to choose from. Remember how southern California real estate was stuck in the toilet five years ago? Smart investors, however, were scouring cities like Indianapolis, Memphis, Atlanta, and Austin because those areas remained hotbeds for great property deals. The term to remember was coined by Jason Hartman. Area Agnostic(™) simply means you take the emotion out of it and buy where the deals are good, regardless of which geographic area that entails.

3. Silence of the Tenants

Take heed. If your tenants figure out you live nearby, there’s a good chance they’ll be knocking on your door about everything under the sun. The water’s not hot enough. The AC’s not cold enough. The barking dog next door is infringing on their civil liberties. And it won’t even matter if you hire a property manager as a buffer. If they know you’re in the neighborhood, they’ll find you. Once again, it’s just human nature.

Often it’s smart to buy local, but when it comes to real estate, maybe it isn’t. (Image: Flickr | Harald Groven)

The JasonHartman.com Team
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