Should I invest locally or out of state?
Many investors struggle with this very question at different points in the career. Maybe you're a newbie investor trying to figure out the best place to invest. Perhaps you're a seasoned pro who is looking to expand his or her business into another City, State, or Country. Regardless one thing is for certain.... you must have a plan.
There is a universal process to being successful at real estate investing and once you understand the process you can replicate it anywhere. Good investors with excellent fundamentals can be dropped anywhere and within a few months be running a profitable real estate investment company.
There is a universal process to being successful at real estate investing and once you understand the process, you can replicate it anywhere. Good investors with excellent fundamentals can be dropped anywhere and within a few months be running a profitable real estate investment company.
The main thing you want to focus on when considering a new location is your team, this is vital! The right team will make the transition easy and make everyone a lot of money. The wrong team will make you wish you stayed home. Your team should include attorneys, property managers, real estate agents, local lenders (private and bank), general contractors, construction managers, trades people, architects and more. I recommend that you interview at least three people for each position (yes, it's a lot of work) and if you don't connect with any, keep the search going until you find the right fit. Make sure your potential team knows you are organized and that you are a real player who is ready to do business when the right deal comes along. Next, establish a credibility packet that showcases what you've done in the past and what your goal is for the area. Showing good organization will help get you to the top of the professional lists of clients to do business with and you never know where your next deal will come from.
Also, do your due diligence! I can't say this enough. There is a standard process to figuring out if a market is right for you. Once you have assembled your team, they can be a valuable resource for understanding the dynamics of the local work and who the players are. When I enter a new market, I always make an appointment with the Mayor, EDC, building department, Section 8, and others depending on your business model. Understand the demographics of the area. Is it a stable market like Albany that doesn't change much? Is the market exploding with appreciation and growth? What is the population growth? What's the master plan for the area look like? Is the economy diverse or centered around one or two industries? What is the supply and demand for your particular asset class? Basic questions like these will help you quickly decide if an area is worth investing more time and money.
Lastly, you don't have to invest where you live. I only invest on Long Island and the Boroughs, but I have friends that ONLY invest out of state. The beauty of modern technology and proper education is that you have the ability to live and invest in totally different places. Just understand that you will need to spend a lot of time in the market at first in order to gain familiarity. Once you learn the market and have the right team in place you can leave the day to day to your team and make quarterly visits to check on the properties.