I am curious about the pros/cons of investing out of state vs locally. I am a young professional in my early twenties with a strong income for my age and zero debt. I want to build passive income for myself in the long term. Id like some advice about where to invest preferably in multi-family homes. As I live in the NYC metro area home prices and property taxes are high. Is it worth looking out of area at a "more for less" deal where i would have to use a property manager?
Another way to ask that same question is,
"Investing in a bad market, just because it is local...or...investing out of state, if my local market stinks"?
Invest locally if you can. But some markets are tough for newbies with limited capital. So don't be shy about finding better opportunities elsewhere. There are good people available in all large US cities. It's your job to find them :). BP can help.
@Ian Sanderson I'm in the same boat, being 24, good income, no debt, but living in DC where home prices are astronomically high.
Being a numbers guy, I was quickly able to determine that even if I had the capital, a buy and hold in DC won't make sense (in most cases) unless I'm purchasing an apartment building, which is definitely on the radar.
So I looked out of state. I found a triplex in the town my parents live and also invest in their own real estate. The returns I'll pull in from the out of state triplex will be 4x what I can get in DC on a percentage basis.
Moral of the story, don't be afraid to look out of state. Look first at the places you know or have been to. Deals are to be had everywhere but don't lock your money up in an expensive investment unless it meets your minimum required rate of return.
@Ian Sanderson -- Josh here from Atlanta. I am just about to wrap up my first year of buy/hold investing, and I have seven doors in this market.
I imagine there are some genius-grade new investors who can get everything running right out of the gate, and for whom out-of-state investing would be easy. I do not fit into this category.
I learn through experience, and I have invested in my properties after extensively driving and walking the neighborhoods in which they are located. I can get to any of the addresses in a half-hour, and that lets me do quick drive-bys when I am nearby.
As a new investor, I gain so much from purchasing properties in a market I understand well. For me, that means buying in Atlanta, until I move or get a whole lot smarter.
I bet there is a deal to be had within an hour drive of your current location. Though it will take diligence, go for the local deal if you possibly can.
I wish you all the best with your new venture. Cheers!
@Ian Sanderson I do agree with all the advice presented here: Lean toward local investing unless the conditions are truly untenable.
Fortunately, I think you've got plenty of local options. While NYC is notoriously expensive, there are tons of opportunities to be found among those NJ cities along the GSP and Turnpike. I'm thinking of places like Union, Irvington, Plainfield, Woodbridge, etc. Nothing hardcore scary like Newark, but also not "New York pricey" like Hoboken or Jersey City.
If nothing else, I'd fully explore all of these spots before taking the leap abroad!
Good luck! Let us know what you discover!
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