Buying rental properties 3 hours away from each other-Good idea??

Question

I am planning to live in Houston and buy rental properties in San Antonio, Austin, and Dallas. The cities are all in Texas but located approximately 3 hours away from each other. Is this a close enough range for rental properties or too far away? I would have to use a property manager for them correct?

Bart H. · Answer

IMO if you are new to investing, and dont otherwise have roots like family or whatever in the other cities mentioned, I would stick to buying in Houston.  There are just too many advantages of being able to personally get to know neighborhoods, be available for repairs etc.

And I think when you are new, the best competitive advantage you can get in the marketplace is picking a very small neighborhood, and learn everything about it.  Drive it, walk it, get updates every time a unit comes on the market.  Know what it sells for and rents for.

Then when a deal comes on the market, you know if it is worth acting on, I just dont think you can do that from a distance until you have the knowledge and systems in place that come with experience.

Plus Houston seems like a pretty good market to be looking, they just had the hurricane, there are almost certainly distressed sellers and reluctant landlords.

If we personally lived closer, we would be looking at Houston.  Personally, I cant speak for everyone, but I think Dallas is getting pretty picked over. They just had the countries largest addition of apartments, the higher end houses seem to be moving much slower.  There seems like a billion all cash buyers  for anything priced within reason.

One anecdote.  Just today I saw a wholesaler in DFW come onto a local FB group for real estate investors.  Here was his offer:

330K-340K ARV (betting it was 330 or even 320K)

295K price

2200-2400 ARV rent (betting it was 2,200)

Needed 30K in rehab.

So basically he is offering a house for 295+30= $325K that is worth $330K,.....with a rent of $2,200.  And that doesnt cover any transaction costs.

Mind you these were ALL his own numbers.The worst part about it, is someone might actually buy that kind of garbage.

Lawrence Rutkowski · Answer

@Bryan Tasumi

As long as the deals are lucrative enough, anything is possible, although yes, it would be wise to use property managers being so far away from your properties.

Why do you want to spread yourself out so much? Why not scale in one of the cities to increase your ROI?

Jim Cummings · Answer

@Bryan Tasumi. Suggest you buy properties in "lesser flood prone" cities North of Houston: Tomball, Conroe, The Woodlands, Spring, Cypress, etc, and greatly reduce your span of control.

Michael Guzik · Answer

@Bryan Tasumi as someone who lives in San Antonio I would say Houston is a little more than 3 hours away... I wish it were less but unless you drive like 90mph the whole way that ain't happening lol. In my opinion I would stick to your area. As stated before unless you have family or a close friend or trusted manager in SA or Austin I wouldn't do it. Because the property will go to waste and fall apart most likely. It sounds like you are scared of your properties being destroyed. This is completely normal and I'm sure most people would feel the same way. You just really need to sit down and weigh out the pros and cons of each decision. Take the emotions out of it! If you find a good deal you shouldn't let the fear of a natural distatser keep you from doing so! Network and ask other investors how they deal with this and what they would do! Good luck!

Lawrence Rutkowski · Answer

You could get a hurricane insurance policy, however depending on the class of house/area and if the area is designated as a "high" or "low" risk zone it could be reasonable, or extremely costly.

My advice would be to at least start and scale in one of the cities and get a feel for it. After you get the process down successfully start looking all over.

If you're interested in San Antonio I'd be more than happy to discuss your goals/criteria and work with you. I know this market very well. I can't speak to Austin or Dallas however, I just know that properties there are more expensive.

Bryan Tasumi · Answer

I want to live in Houston but I don't like it being a hurricane city and dealing with floods. If there were no flooding/hurricanes I would invest in Houston only. Any advice? Are hurricanes and flooding worth it to invest?

Aaron K. · Answer

You would most likely need a property manager for each city, it depends on your comfort level, but if you can find good deals in each city, why not just focus on one city for maximum efficiency.

Buying rental properties 3 hours away from each other-Good idea??

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