Better to buy multifamily rentals close to home?

[Tara Brodersen]

I want to invest in multi-family rentals,but the market where I live is quite high and limited. Is it wiser to buy closer to my area, or should I look somewhere afar, where it is less expensive, and hire a property management company?

[Michael Wentzel]

@Tara Brodersen Welcome to Bigger Pockets! There are advantages and disadvantages to both options. Presumably, you know your home market well and it is nice to be able to look at potential properties in 15 minutes. You also have the possibility of managing your own properties if they are close by. But managing your own properties can be a lot of work and a lot of headaches. Even if you purchase in your town, you might want to consider a property manager.

We turned our original home into a rental property and were forced to use a property manager when we moved overseas. It was great. The best 10% I ever spent. Basically, they deal with 95% of the issues and get in touch with me only when there is a major problem.

Recently I heard the quote on a podcast by the Real Estate guys which said, "Live where you want to live, but invest where the numbers make sense." If you're willing to utilize a property manager, it opens up most of the US to you. I would recommend doing some research on a few markets and then picking one to really get to know and invest in. It doesn't have to be a major market. We've found great buys in a community of about 100,000 people 40 minutes away from us.

So weigh your options. If you can find a market that doubles or triples the returns of your own market, I would make the jump. If you find markets that are only marginally better than your home market, I would stay at home and enjoy the local knowledge and convenience of being close to your properties.

Mike