Are You Willing To Bet Your Retirement On Your Local Market?
About 95% of my clients come from outside my home market. That makes sense when San Diego is home to less than 1% of the nation’s population. The diversity of client location is helpful to me in understanding what most markets in the country are experiencing, at least when it comes to real estate investing. It also helps when I put my own boots on the ground to see for myself.
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Most real estate markets should be put into investors’ rear view mirrors when the end game is a healthy, reliably abundant retirement. However, many falsely extrapolate from that statement that the reasons are universally the same. Nobody would mistake my local market, San Diego, with say, Bellingham, Washington. Yet I’ve successfully told investors in both markets to Get Outa Dodge — by around 4:30 yesterday afternoon if possible.
I’ve learned over the years how much folks love their hometowns. Duh. This goes for places that endure polar winters, Death Valley summers, tornadoes, hurricanes, and the like. Roots are roots, and for most of us they go deep. How deep? I’ve had folks in East Toilet Seat, Minnesota tell me they prefer all four seasons vs the two San Diego seasons they called, Sunny, and Partly Cloudy. 🙂 They love where they live in spite of having to shovel snow from front door to car door in the winter. Then there’s the Scottsdale guy who not only doesn’t mind 114° heat requiring him to constantly protect his steering wheel, but loves trail biking in it. Go figure.
If I ever completely retire, a doubtful scenario at best, I’ll maintain a place in SD, but will have an out of state home as well. Maybe more. However, I’ll not have any local investment property. It simply doesn’t compare favorably at all with a few other regions.
When I made the decision back in late 2003 to abandon San Diego as an investment market, it was an emotionally difficult process. Still, I sometimes beat myself up a bit for being late by by a year, maybe two. Even after the painful local price correction, still underway in my opinion, the price/rent ratios here suck like a Dyson.
I mean, seriously, would you pay $350,000+ for a half century old duplex sportin’ just $28,000 a year in rent — before vacancies/operating expenses? Yeah, I pass too. Now, imagine the investor who, in 2005 paid $570,000 for the same property, same income.
Wonder if he’s still mad at me for knockin’ my local investment market’s ‘opportunities’?
Whether you’re in a west coast market with make believe price/rent ratios, or somewhere in the midwest where folks are fleeing for employment, and the chance to once again live in a neighborhood where most of the homes are actually, um, occupied — chances are your investment opportunities are inferior, big time, to a few far away markets.
The question you need to ask yourself, and I’m being as serious as a heart attack, is:
Are you willing to literally bet not only the quality of your retirement, but IF you’ll be able to retire on your local market?
Be slow, and ponder your answer carefully. There are those who retire well, and those who still rise early each morning for work. Many successful retirees never realize their long ago decision to leave their local market to invest elsewhere was THE pivotal decision, the catalyst for their ultimate success.
Getting to your retirement shouldn’t be against the odds. Just sayin’ . . .