Landlords, Is it better to buy apts in 1 area or diversify?

[John S.]

Hi guys, I'm looking to expand my rental portfolio (currently have 1 rental) and am wondering, is it better to diversify across regions in the US, or concentrate on 1 area?

I have a rental in Arlington, VA (next to Washington, DC). I can see the benefits of concentrating because it'll make it easier to manage if I stay in DC. Alternatively, if DC's economy tanked, I may be in a bad position - that's why I was thinking of diversifying rental properties across the country (e.g. Austin or LA). What do you think makes the most sense?

[Russell Brazil]

Diversification can happen without expanding into other markets. You diversify by owning multiple properties. It is always better to invest in the market you know, as market knowledge is the best method of managing risk. 

If you buy in the higher income areas of the metro area you are less likely to run into trouble during economic downturns.