Vacation rental or local rental investment?

[Keaton Vols]

I’m 27, live in North Dakota, and already own local rentals. I’m currently flipping two homes and plan to reinvest the profits into my next purchase. I’m trying to decide between buying a vacation rental in Arizona (short-term rental, likely using a property manager) or purchasing another multifamily property locally.

The AZ property would give me geographic diversification and potentially higher upside, but it would be remote and more management-intensive. A local multifamily would be simpler, easier to control, and more predictable, but maybe slower growth.

Given my age and current position, would you prioritize diversification and higher potential returns, or simplicity and local control?

[Ken M.]

Quote from @Keaton Vols:

I’m 27, live in North Dakota, and already own local rentals. I’m currently flipping two homes and plan to reinvest the profits into my next purchase. I’m trying to decide between buying a vacation rental in Arizona (short-term rental, likely using a property manager) or purchasing another multifamily property locally.

The AZ property would give me geographic diversification and potentially higher upside, but it would be remote and more management-intensive. A local multifamily would be simpler, easier to control, and more predictable, but maybe slower growth.

Given my age and current position, would you prioritize diversification and higher potential returns, or simplicity and local control?

I provide discounted properties in Phoenix to investors and I still say invest locally if you can. First it is a real hassle to deal with a problem when you're that far away. Second using a property manager can be hit or miss regrading satisfaction of performance. Third it's tough to learn a new market and keep up with local laws & events and it's important to know what is going on if you want to be profitable. The mind set difference between North Dakota and Arizona is night and day.

It's curious to me that people from California invest in Ohio and Indiana, both nice places,  when Las Vegas,  Phoenix and Tucson are near by. That much distance matters.