BiggerPockets

If you are new I highly recomend you buy locally. Investing long distance can be done but with added risk. The fact you are new increases that risk exponentially. The grass in NOT always greener on the other side of the fence. Trust me there are good deals near where you live.

Is there a reason you want to invest out of your area?

Tim your right to challenge me. While I truly believe good deals are everywhere that doesn't mean any strategy will work anywhere and Chicago may be a tough place to buy rentals.

However I would consider 30 minutes away to be close by and certainly a better choice than 10 states away.

I certainly wouldn't look for the next " Hot" area. What's hot today, will be cool tomorrow. Lot's of development in Detroit in the next 10 years? WHAT? The population of Detroit has been declining for over 50 years.

Forget the fads and invest close to home for the long term.

Mike

Although with Ford posting a $100MM Quarterly profit this last time around, that *may* start to change... but I still would agree with what everyone has said here and stick local to begin with...

You need to be close to your rental properties. No one will take as good of care of them as you will.

If you don't want to buy in Chicago, then move to somewhere else. But don't be a long distance landlord.

I believe that there are good deals everywhere, but that does NOT mean that there are cash flowing rentals every where.

There are different types of deals. " Good deal" isn't limited to cash flow deals.

If I can buy a house with $100,000 instant equity, I can sell it and make $100,000. That's enough for me. I don't have to have cash flow, too.

There are differnt types of real estate deals that don't involve renting.

There are some areas where it takes a lot of time and effort to fnd the deals, but that doesn't mean they don't exist. If it were easy, anyone could do it. But most deals are only there for the people who want to put in the effort to work at it.

Well, I can't help but to completely disagree with another poster here as I own several cashflowing properties in Chicagoland (not in Indiana). Although I do own a bunch in Indiana as well and they cashflow nicely. I guess we also have to consider that many people say they are from " Chicago" and in the end the are really from Naperville which is actually 40 miles west of Chicago.

But the actual location is MOOT for this topic. Without a doubt when starting out, you want to be close. What is defined as " CLOSE" is up to you. However, I would suggest that you don't want to think of driving to the property as a " hassle" .

Yeah - when you have a hard time finding property that grosses 1% of the purchase price in monthly rent you know you're starting from a rough position. I even helped a lady out with a rental property she had that was eventually leased to Harpo Studios (a.k.a. Oprah) for guests on Oprah's show and that didn't even " cashflow" . She was already rich so she was able to buy it cash - however had it been bought by the standard investor it would have negatively cashflowed a couple hundred a month.

There is one market within Chicago that I've seen a " regular person" be able to make work in regards to cashflow. Ryan MacIntyre, a student of Greg Pinneo (whom I think is an excellent gentleman and investor), has found a niche within what can best be described as fully furnished, short term corporate rental to graduate medical students. Maybe if you can find a similar niche you can make that work - operating a luxury dorm room.

I used to live in Memphis...and if I owned rentals there I would have a manager go take care of them too. The idea of being shot doesn't appeal to me. That is most dangerous city I've ever lived in.

Outside of that, however, I don't agree with using property management unless you are at such a level where the hefty cost is justified. Think about it. A tenant has an issue, they call the prop mgt company, the company calls a repair guy. Why can't I just save myself the 8% of GROSS rents and take that phone call and call the repair guy myself?

Grand & Mike
I get your point. But, I don't want to wear all of those hats. How can one possibly manage...wait, why would someone want to manage 50 rentals. I make my living doing deals, not managing properties. If my goal was to have 1000 rentals, how could I ever accomplish it if I were managing the others. Should I start rehabbing personally so I can save a few more bucks? Don't get me wrong, if you have a few rentals, no problem. Manage. But the context of my post was in response to a few members commenting on being "close" to their rentals, not the little snipits that were chosen to comment on. And Grand you are right, Memphis is tough, shouldv'e moved to Germantown.

Two points of view here. One is self manage and two is outsource the service. Both are viable choices and realy depend on the individual investor and the investor's geographical location to the investment.

I live in CA. Do you think I can buy sfr's here and have positive cash flow? The answer is very rarely or more accurately, a needle in a haystack!

Therefore, I must invest out of state, and since my state is so large, out of state means hundreds and in my case, a couple thousand miles away. I can certainly answer phone calls and hire service providers to do misc. rpairs, etc., but how do I confirm the job was done right, that I was not charged for itmes that were not completed or necessary? I need someone on the ground to protect my interest.
Now that brings up the discussion of "how do you trust your PM?"
Well, jsut like everything else, that takes time, effort, and you have to stay on top of them as well. Having the right team memebrs is crucial and knowing how to interview and hire them is just as important.