Do you recommend buying your first rental property in the area closest to your home?

Question

Hey there! Santa Rosa, CA resident here, ready to dive into the world of real estate investing! It's an exciting journey, but I have to admit, the higher prices in my area make me a tad hesitant. Still, I'm determined to purchase my first rental property this year.

Being close to my investment has its appeal, but I could really use some guidance from seasoned experts like you. Should I take the plunge and focus on Santa Rosa, and Northern California or would it be wiser to explore other opportunities elsewhere? Any advice would be greatly appreciated!

Thanks a bunch for your help—I'm eager to kickstart my real estate investing adventure!

Carlos Valencia · Answer

Hello Steve,

If the area your in does not have any units that have the ability to cashflow or at least break even I would recommend looking elsewhere so you can get the most out of your investment. Unless your looking to buy and hold for appreciation over the time. Another option if you want to stay locally is house hacking where you buy a single family home or multi unit and live in one of the rooms or units. This wont cashflow right away but it can potentially allow you to live for very low cost on your end while your tenants pay for the majority of your mortgage. If you do this option of house hacking make sure that when you leave you will cashflow otherwise it wont be a good investment.

@Albert Bui @Matthew Kwan

Keith Mintz · Answer

Buy where you feel most comfortable and happy with. But don't be closed to the great opportunity of other areas as an investor. Just make sure to do your own research and understand the market you're buying in. You don't want to do something you will regret or don't feel good about even if you make the right investment decision. Understand your investment most of all. Generally starting in your own area aligns with this, and can be a great option, just research your area as an investment.

Ranjit Sandhu · Answer

@Steve Ogle Maybe look for off market properties. But you need to look for those. Let me know if I can be any help as I'm in Rocklin/Roseville area north of Sacramento. All the best!!

Noah Laker · Answer

I'm a broker and investor up here in Sacramento. I manage over 100 properties, mostly STR / Airbnb. Most of our clients are from the Bay Area, trying to invest close to home without getting destroyed on pricing, tenancy laws, and crime.

Not that Sacramento is a walk in the park either, but it's one of the fastest growing metros in the country for the last decade, and it's still cheap enough to cashflow in certain areas.

Eric Gerakos · Answer

Keep in mind that prices are higher where you live because people actually want to live there as opposed to less desirable parts of the country. Cheap houses are cheap for a reason. Supply and demand......

Jake Andronico · Answer

@Steve Ogle

Welcome to BP!

Totally understand the hesitation. But as some others have said, starting close to home can be extremely beneficial in learning if you are a fan of the business or not.

Bryce Jamison · Answer

If there's deals in your area that will cash flow and are in decent areas then absolutely. You already know the area, so you know the parts of town that renters would want to be in, you know what market values are, and it'll be much easier to get to the property for things like inspections, showings, and repairs & maintenance.

As you build your team and become more experienced you won't need to go to the property in person as much, or ever, but personally as I'm growing my portfolio I like the comfort of easily being able to put my hands on my properties.

Steve Ogle · Answer

Thank you for the great insight @Konstantin, much appreciated!

Konstantin Ginzburg · Answer

@Steve Ogle

From personal experience, I think starting off in your own area is extremely beneficial as you have mentioned. When we started in real estate a few years ago, we eventually owned and self managed a SFH and a 4-plex by our area. By getting hands on practice and experience with management, we were able to learn what goes into managing a property which in turn gives us insight into how to manage a management company. I understand your concerns regarding the high prices in your area. I would also honestly be concerned about how favorable the CA laws are towards the tenants as opposed to landlords so investing out of state might be an option to consider. We have since moved and now manage 2 SFH from a distance so it is possible to do. The key though is having boots on the ground and people you really trust near those properties to watch over them for you. If you are able to build a quality and trust worthy team in a second location, then long distance investing is absolutely possible but if you choose this route, I would advise focusing on building a local team before you start looking into actual properties.

Do you recommend buying your first rental property in the area closest to your home?

Most Popular Reply