BiggerPockets

I decided to invest in real estate just a few months ago and I am still in the researching process. I obviously 'am a bit anxious about the whole thing, but also excited about what the future may hold.

I am currently in the process of identifying an area where I can start my investment. I live in Northern Virginia, but i am open to buy anywhere in the States. Does anyone have an idea as to what the best areas to invest are? what states? and specifically, what cities?

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This is a topic of increasing interest to me.

Ayad, like you I'm in Virginia and am trying to get my first deal going. Down south here in the Hampton Roads area, I'm finding it difficult to find properties that work numbers-wise. I did some MLS searching in Richmond last night and there appears, at first glance, to be many more affordable properties in the capital than here in Virginia Beach. However, I don't know the area at all, so I'd have to figure out how to minimize that risk.

Josh, Thanks for your comments. I've been thinking about the possibility of long-distance investing in Kansas City as affordable properties there are readily available. Also, I'm from KC originally, so I'm familiar with the area and may eventually retire there. So it could be a possibility.

I'll be interested to see what others think of long-distance investing.

Tim, could you pls tell a little more about this? What are the major challenges of property management? You have tons of experience, I believe, and this should be of importance for many, because investing within one or two hours from your home not always works. I would say, investors go where a good deal is... and if a good deal is 1000 miles away, that's where you go?

Great post and questions! This is a topic of great concern for newbie investors. Although Josh makes a valid point about investing in your own backyard, it is not always feasible. The key is knowing how to build a quality team or have an expert on your side who can provide this to you. I reside in CA and would not touch a residential property here. I find that the best areas to invest in for long term buy and hold strategies are undervalued markets, strong economy and job growth, diversification of jobs, and a very strong rental market (good rates with low vacancies.
These areas are not usually where we live so it is necessary to go out of town or out of state. Texas, the Dallas/Fortworth Metroplex in particular, has strong job growth, great rental demand, is the #1 most undervalued property in the US, and you can receive great positive cash flow with very little $ out of pocket. This is a great area & strategy to start as a beginner.

As far as some bad past experiences mentioned by Tim, I feel for you as you are not along, but never let that discourage you or ever say that all property managers are useless or incompetant. One of the greatest advantages to working with a prof. company such as mine is the buying & negotiating powers I hold. For instance, a property manager would risk losing All of the clients I send their way by screwing one of my investors. A beginner on hi/her own is more exposed to be taken advantage of because they lack the knowledge, experience, and the risk of loss to the manager.
Happy Investing to All!
Will Barnard

I'm going to speak from the perspective of residential property and multi-unit residential property. I do have a small commercial building but I am by no means any kind of an expert on retail/office, industrial, special use cash flow...etc....

The major challenges really you create by bending your own rules. I.E. - letting in tenants that you probably know you shouldn't, not taking care of property from a maintenance standpoint, not keeping proper records, etc....

Here's the thing with Property management. Property management really isn't major challenges, it's a plethora of minor challenges - the little time-consuming things that really just have to get done. The maintenance, the brainless tenant repair calls (True repair call after I showed up at the property: " My toilet makes noise like water's running when I pull the handle." Me-" Yeah, it's called flushing. Toilets do that." ), other brainless tenant calls (True tenant call to office: " My aparment's on fire!" Office: " Why are you calling us? Call 911!" Tenant: " Ok, what's the number?" ), the sob stories (True conversation with tenant: Me-" You stopped paying rent, what's going on? You've been paying every month on the first for over a year now." Tenant-" Oh yeah, well dad moved out and I'm trying to get a job to pay for the rent." ) Now - all these issues you can deal with yourself. I can but that's because I have the time and the temperment to. You can also get professional management and often when you go to an area for cashflow the cashflow is good enough to easily cover this cost. I haven't needed prof. mgmt yet but personally, but I've looked into it a couple times and the only time I've seriously considered a mgmt company is when it's run by ex-military people. I met a marine in Memphis who was a property manager there. I passed on the city due to the prop. taxes but this guy had his stuff together! If I'm going to have someone manage the plethora of little issues, I want the most anal, detail and action-oriented people on the planet. I want someone who's going to call me to inform me that a tenant reported a roof leak, someone from the office confirmed and that they have the contractor scheduled to go out there and repair. I don't want someone to call me and say the tenant has reported a roof leak - what do you want to do?

I agree with you that investors should go to where good deals are. That's been the basis of real estate investing since feudalism was established to control the good farming land. You had to farm where land was good. You have to buy cashflow where cashflow is good. It's a basic concept. My opinion is that folks should start in their backyard then slowly branch out until they find it. Find it as close as possible. Starting 1000 miles away is a pain in the butt. I've seen it done with great success 500 miles away and that was a pain for the investor. Maybe it's different with commercial space? I don't know.

But hey - if it wasn't a pain in the butt would the rewards really be worth it? What's that phrase - most people miss opportunity because it shows up in overalls and looks like work.

Tim