Starting where you have contacts vs. where you're excited to be.

4 Replies

Hi all.  This is my first post here - I'll try to keep it short.

I've become incredibly interested in REI over the past 3 months. I've gotten to a spot in one of Brandon Turner's books where he is talking about the importance of mentors, contacts, and finding good contractors, and it's sparked a bit of an internal debate. You see, I want to make my first purchase within the next 12 months, but I haven't actually chosen a region just yet. I have 2 different areas in mind:

Area A:  This is the area I grew up in.  I know a lot of people here, related to the real estate industries and otherwise.  None of these people know about my fledgling real estate interests yet.  Here, I know lots of RE agents including some acquaintances from high school, parents of long term friends, as well as some family friends.  My best friend's parents are the owners of a large and successful contracting company.  My brother's best friend's dad is the owner of another smaller but successful contracting company, for which I even worked a summer renovating apartments.  There's a mixed bag of other contacts I know who have been in the industry for a long time.  The point is, I know the area well and I'm already 1 or 2 degrees away from the most valuable players in the game here.  It might be worth considering though, that this is an affluent area of an expensive state (CA) and might be a lot harder, financially, to break in to.

Area B: This is not a distinct area, but a general idea.  It would be in another, cheaper state (PNW or SW) in an area that actually excites me more due to the landscape and lifestyle.  I've spent time here in the past and would like to be there again.  See, my biggest hobby is wilderness backpacking and I have always dreamed of one day owning substantial property in mountainous areas close to national parks and wildlife areas.  So, I already know that one day I'd like to have my own purchases in these areas and 'end up' there. I know that doesn't necessarily justify a business strategy of starting out where you'd like to end up. These areas (I believe) are generally also a lot cheaper to break into than Area A.  

I know none of you will be able to give me the perfect answer for my personal situation, but I would love to hear input from those of you who have already actually been in the industry.  I can't quite see where I'm going, and advice from those of you who have navigated these waters already would be very much appreciated. 

@Will Glaeser   I think it would be easiest to build experience and a track record of success in Area A and then transfer the experience and track to Area B to continue to grow your business.  You can be successful with either track you choose, the path will just look different.

@Will Glaeser So you have a specific set of variables in your favor for Area A and nebulous desires in Area B. Not a fair fight! So here’s what I think you should to: pick two actual cities and optimize around “want”. The two cities/towns you’d REALLY WANT to live in. Then you can see if properties in those areas are cheaper, do pencil out better, etc.

The reason I’m saying this is that maybe 5 years ago I went through a weird exercise of “How much cheaper would it be to live in...” with a couple of cities. You’d think that if you compare to San Diego every single place is an “easy win”. Bottom line, due to many glorious unique factors for me there was actually very little difference. So what I thought at a macro-level wasn’t the reality at a micro-level.

If you run the same exercise you’ll be able to project investment returns in you’re “A” vs. “B” areas.

My gut says, go with the devil you know, where your connections are, etc. But at least make it a fair fight :)

As an investor, A has concrete rationale rather than more abstract things such as like the area.  

If you invest using your head, A is the obvious choice.  

If you invest with your heart, B is the obvious choice.  

I suspect investing with your head is much more likely to be a good investment but sometimes you have to do what the heart wants.  Life is short!

Pick one that is right for you and never question the choice. 

Good luck

Yea, now that I’ve read my post a few times, it’s obvious that Area A would be a much better starting area. I can practically walk into a situation I’m sure a lot of people work hard for. Plus, if I start in area A, it would likely expedite my journey to area B, but not the other way around. I like where I grew up, anyways. Perhaps I’m a bit intimated by the much larger financial barriers to entry, but I’m sure I can figure out ways to solve that riddle. Thanks for the input, everyone.

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