Do you invest where you live, or where the numbers are?

Question

Two brokers on this week's On the Market said the exact opposite thing, and it had me thinking.

One picks the market from the data first, then looks for deals there. The other only buys on Long Island and says he has no idea what's happening anywhere else.

I personally only buy in my general driving vicinity (a couple hours each way) and have had success with it. I know other's that only go out of market to find their deals for several reasons.

What's your typical playbook? The best answers run in Thursday's edition of the BiggerPockets Investor Brief newsletter.

Gregory Acs · Answer

I think both approaches can work. I prefer to let the numbers lead the decision, but I also want to invest in markets I understand or have a reliable local team in. A great deal on paper can become a headache if you don't have the right people on the ground or understand the local market dynamics.

No matter where you're buying, I also like to make sure the financing fits the strategy. The right loan structure can have just as much impact on long-term returns as choosing the right market. If anyone is comparing markets and wants to see how different financing options affect cash flow and scalability, I'd be happy to help.

Tim Maloney · Answer

I only flip in markets where I live—or have lived—so for me, that’s two places.

This is anecdotal, but when I’ve seen investors lose money on flips, it usually comes down to three things:

• 1. The project took too long, and carrying costs ate the profit.
• 2. They over-improved the property. A $250,000 house doesn’t need a Viking range and a $100,000 kitchen.
• 3. They were too far away—or simply not involved enough—to keep the project on track.

1. The project took too long, and carrying costs ate the profit.

2. They over-improved the property. A $250,000 house doesn’t need a Viking range and a $100,000 kitchen.

3. They were too far away—or simply not involved enough—to keep the project on track.

Data can help you choose a market, but execution determines whether the deal succeeds. It comes down to the old adage: Inspect what you expect.

Do you invest where you live, or where the numbers are?

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