All Forum Posts by: Billy Smith

Hello @Alyssa Dinson,

The adage, "Live where you like, but invest where you can make money," is true and remote investing works, if you have an experienced investment team.

We’ve run an investor services business in Las Vegas for over 17 years. Out of 180+ clients, only 8 or 9 were local. All the rest live in other states or countries. Does remote investing work? Our repeat business rate is >90%, so our clients are satisfied with our services.

The goal of real estate investing is financial freedom. This requires an income that allows you to maintain your standard of living throughout your life. The city where you invest determines all long-term income characteristics. To create rental income that enables financial freedom, you need a location that meets specific criteria.

• Rents increase faster than inflation: Prices and rents are driven by the imbalance between demand and supply. Significant and sustained population growth leads to demand exceeding current supply, causing prices to rise until there's a rough balance between sellers and buyers. As prices increase, fewer people can afford to buy homes, forcing them to rent. This increased demand for rental properties drives rents up. Only invest in cities with significant and sustained population growth.
• Lasts throughout your lifetime: For your rental income to last, your tenants must remain employed at similar wages. The challenge is that non-government jobs are often short-lived. Companies typically last only ten years on average. Even giant corporations like those on the S&P 500 only last about 18 years on average. This means that every non-government job your tenants have will likely end in the foreseeable future. Unless new companies create replacement jobs in the city requiring similar skills and pay comparable wages, your tenants may be forced to take lower-paying service sector jobs. The result could be limited, no rent growth or even rent decreases. Therefore, your long-term income depends on the city's ability to attract new companies. Companies have considerable flexibility in choosing where to set up new operations. So, only invest in cities that meet the following requirements:
  • Low crime: Companies are unlikely to choose high-crime cities. Never buy properties in any city on this list of the 50 most dangerous cities.
  • Low operating costs: Companies are less likely to choose cities or states with high operating expenses for new operations. This is why so many companies are leaving states like California.
  • Pro-business environment: Companies want to focus on their core business, not fight anti-business policies.
  • Significant infrastructure: Companies favor cities with substantial airports, freeway systems connecting to other cities, and more. This level of infrastructure typically exists only in cities with metro populations over 1M.

Summary

The odds of living in a city that meets all the requirements for financial freedom are low. Don't limit your future financial freedom to just where you live today.