May 27, 2016 - 11:03
You will hear many opinions from investors suggesting that it is much better to invest in your local area but at the same time you will hear others say to invest somewhere else because there is more opportunity somewhere else. Some have made great return on investing in a specific niche while others have hard a difficult time keeping their heads above water. So who is right? There is no right or wrong answer for this but here are a few thoughts to consider before you even begin to invest.
Know your zone
One of my biggest suggestions for someone who is starting out in real estate investing is to learn how to study your own market. Unless you have help and guidance from someone experience, always start in your own city first before you try to conquer others. The reason is because you are much more familiar with the area, the type of market, neighborhoods, values, etc. On the plus side, you will be able to check up on your property more frequently to know how progress is going. While you make a few deals happen in your city it will teach you how to evaluate your own market, prioritize and systematize your approach. I would suggest you have a few deals under your belt in your own city, then it will be a safer approach to invest out of the city or state.
Another thing to consider is that when you do your own flips you will notice that there will be a few obstacles you will encounter with the home. It will need attention and cause you to visit the property to get things straight with the contractor. Now imagine if you have to do this with a property that is out of city or state, that will bring on its own challenges. Also, hiring contractors for a flip house can be a good and bad experience for anyone starting out, but once you find a good contractor in your city it doesn’t meant that he will travel to another city or state to work on your other flip houses. This brings me to my next point, learning how to hire and manage contractors is a big part in your success because if you want to expand your investment portfolio out of the city then you will need to learn to manage contractors in order to keep your profits steady.
Remember, doing this by yourself will just make it harder for you to grow and expand as an investor so having your own team will be essential. For example, having your own team member for the following; marketing, sales, management, realtor, appraiser, etc. If you make this team in your city then it will go much more smoothly for you to invest out of state.