Which area would you invest in?...

Question

Ali Boone · Answer

Well the biggest question is...which of those areas, if any, will cash flow? The numbers have to work before anything else.

Gabriel G. · Answer

@Erik E. I would pick something close to you. Even if the returns aren't the best, you will learn a ton about the local market and you will be able to save money by self managing. Just my $0.02.

Matt Lefebvre · Answer

Hi @Erik E.!  I think which area you invest in depends on several factors.  In my opinion, at least in the beginning of your investing career, it usually makes more sense to invest locally as it gives you more exposure to the industry you're involved in.  You understand more about the market, you can drive by your properties to "check up" on them, you can interact with other players in your market at various events, etc.  However, the deciding factor should always be: can I make money where I'm investing?

Being unfamiliar with your market, I can't advise you as to if you can make money or not.  First it is a matter of affordability.  Do you have enough cash to purchase investment properties in your local market?  If the answer is yes, the next question should be: can I get a good return on my investment?  If the answer is still "yes", then it probably makes more sense to invest locally.  However, if the answer is "no" to these questions, then expanding your search area is a smart idea.

If you're looking to invest out-of-state, you obviously need to be able to afford and make a good return on investment wherever you're looking.  If it checks those boxes, than the determining factor for whether or not you should invest locally boils down to do you have a team in place to reach your investment goals?  Its nearly impossible to successfully run, manage, and grow an investment portfolio by yourself, if you live hundreds of miles away.  However, if you have a team of key players in place, (deal-seekers, property managers, contractors, lawyer, accountant, etc) then you can make money from anywhere in the world.

That's my two cents; best of luck and let me know if you have any other questions!