After plenty of learning, my wife and I are now on our search for our first rental property investment. We live in South Florida, where its difficult to find a good cash flowing deal. We've actually found a few properties within 25 minutes of where we live that seem to have somewhat decent returns .. 9-10% CoC ROI , ~$150 net cash flow monthly. These numbers seem to go higher when we look Orlando / Tampa area (3-3.5 hours drive from us)
SO, let's say we were going to use a property management company right off the bat. Why would you recommend staying local for our first property, or why not?
I struggle with that question myself. We have three properties that are in 10 mile radius from where we live, and then one around 75 miles.
It is just that we feel for capital improvement projects, being nearby helps out even if you have a property manager. For example, our property that is 75 miles out, is next to a 2 lane street and we are looking to raise the fence and plant some trees. It is lot easier if we were around. For HVAC replacement I feel the same. It can save you $500 to $1000 if you are involved in these decisions based on our pure guesstimate over a year.
2nd advantage is we have much better idea in terms of how much to push on rent in nearby places than the one that is further away. Property managers can help you quite a bit but we feel we have little more say into it for local zip codes.
Other than that, I am not sure if there are other big differences.
Staying local will be relative, the main argument is that you know the area and what properties should rent for during the buying process. If you are willing to accept a property manager's opinion on what a property should rent for and how long it may take to find a tenant then go ahead. Staying local gives you a better idea of how long your property will be on the market, what it should rent for, and what condition it needs to be in. The main risk is if a property manager or realtor inflates potential rental value and you get stuck with a property that doesn't work out well, this would not happen as often if you stayed local where you are able to estimate your own numbers more accurately.
@Brian Dickerson , my closest property is 2.5 hrs away in Jacksonville and my farthest properties are 8 hrs away in Chattanooga TN. That being said, I manage them myself remotely and I insist on being as physically involved as I can reasonably be. Conveniently, I have to pass through Chattanooga on my way to see my parents in Kentucky and I have to pass through Jacksonville on my way to see my in-laws in Maryland. I never pass through either of those cities without at least driving by my properties. The key is keeping your properties under your own thumb or with a property manager you trust, regardless of how far away they are. You must select properties and markets that fit your investment criteria and your goals.
I'm looking for deals in Palm Beach County as well and it seems to be slim pickings.
Nothing is more important when buying than knowing your market. You should virtually always buy in the markets that you know best. Most people know local markets the best. So the question for you is how well do you know Tampa vs. where you are?
A side benefit for buying local: you can always seize control of the property, whether you're talking about rehab, property management, etc. Once you are outside of practical geographical range, you are going to be much more dependent on the abilities of others.
Hello @Brian Dickerson :
Congrats on your decision. Looking forward to hearing about your success.
Also, I think you made the right decision first. Many people feel that you need to manage your own properties. Personally, I think the decision to self-manage depends on many factors that are specific to you and not the industry. How much do you value your time, etc.
That being said, as you have already decided to use a PM, then there is no reason to be limited to any one market. BP is full of investors who own properties far from where they live. I would just encourage you to find markets you feel are good investments (emerging), research them, visit them, build a team there and jump in.
Best of luck and keep us updated on your success!
PS drop me a line and let's chat and meet for coffee. I am always happy to meet new investors in our area.
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