Do you invest in multiple markets?

Question

For those who buy rental properties, do you invest or want to invest in multiple markets? I know a lot of investors who invested in one not-so-landlord-friendly state successfully. I know it can be done.

That said, with a lot of unknown happened around the country, happening and sure to happen in the future, I feel like it's wise to invest in multiple markets. Any thoughts on this?

Stone Jin · Answer

I invest in multiple markets.  My take is to pick 2-3 markets and stick with those and get some momentum.  I wouldn't have 10 houses in 10 markets.  That'd be a nightmare.  It takes a lot of effort to find the right team, so when you do you want to leverage those processes.

John Warren · Answer

@Soh Tanaka I have apartment buildings in Indiana as well as here in Berwyn and Lyons in the western Chicago suburbs. If I could go back in time, I probably would have just bought here on the Illinois side. Yes, Cook County is not terribly land lord friendly, but the tenant quality is SO much better. Also, the rents continue to appreciate like crazy. Those Indiana 500-600 rents are not much help when you have to do repairs...

Soh Tanaka · Answer

@Frank Wong - Can I challenge your thought? I think if you are good enough to master one out os state market, you should be able to master one more. At some point, it becomes too much, but I think 3 markets are definitely doable.

Soh Tanaka · Answer

@John Warren Maybe you are not a single family (SF) investor (and that's totally fine), but I think the situation is a bit different when it comes to SF in IL vs. NWI (North West Indiana). I think NWI becomes very competitive, maybe better. This is even truer if rent control becomes law in IL.

That said, I can see the challenges of 500-600 rent apartment.

The way I look at it is not only which place is the best right now but also what if something happens to any particular market. As an example, I just found out that there are a few plants around where I live that are omitting very harmful chemicals. Depending on how this story develops, it's possible that this area could become a bad area to invest. These are the things that are just too hard to predict, thus diversification comes into play. What if I put all my eggs in one basket, all my money in one apartment building nearby the plant?

Hai Loc · Answer

Didn't really answer the question..

I do..  Columbus OH as an established market

Detroit as an up and coming/has room to grow

My local market is too expensive but closest to local is Buffalo/Erie County

Soh Tanaka · Answer

@Joel Florek Basically what you said is what I'm thinking. If you are from Michigan City, IN, you are in a good place where you can get a lot of good rental properties!

Joel Florek · Answer

@Soh Tanaka I have to agree with the advice that if you focus on one market you will master it. But my frustration is that if you are looking for a specific type of property at certain valuations it can be tough to find what you want and therefore deal flow can be a challenge.

I am also in the camp of buy and hold for the long term. With that said I worry about long-term issues of particular markets. Things may be good now but what if GM happens to shut down the plant they owned for 50+ years in the town(aka recent events)?

With that said my longterm goal is to scale up my business and own rentals in 3 different markets. This way if any particular market has an issue my portfolio can still sustain itself from a microeconomic shock. Again, this is longterm thinking though. Currently, I am invested in two separate markets that happen to be about 450 miles apart.

Frank Wong · Answer

Hi Soh,

I invest in my local market and 1 out of state market.  I do not want to be all over the place with properties.  This way you can master your target market. I know if I have a deal in my hands within 15mins of looking up a property. Can't do that if you are focused in multiple areas.

Soh Tanaka · Answer

@Michael Ablan  Just like many things in real estate, "it depends" is the right answer. I think investing in one market can certainly work for all the reasons you mentioned, so long that you know the special risk that comes with investing in one market.

Soh Tanaka · Answer

@Jake C. There is for sure positive things about investing in an area where you can easily go. Having said that, I invest in a place where I basically never go (even though I can if I have to,) and just rely on my team to take care of the properties. So far so good. If I can duplicate this in another market, I'll do it.

Paranoia maybe, but with so many different things happening all over this country, I feel a bit unsafe to invest in just one area.

Do you invest in multiple markets?

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