How close to your properties do you prefer to be

Question

I am not a flipper. I am not looking for massive cash flow. I want to buy SFH homes in B and C class neighborhoods in the cities that have the best chance for appreciation.

I live in an Eastern suburb of Cleveland. Cleveland sucks, the inner east side is the ghetto, and the outer eastern suburbs are flat at best.

All the growth is On the West and South/West side of Cleveland.

Its only about 45-60min drive to some of the growing areas. Is this a reasonable market to try and get into? Or would I be better off investing in my own county so that I am close to my properties. Am I over-thinking inflation?

Below shows the growth map

http://www.cleveland.com/datacentral/index.ssf/2010/06/find_2009_population_estimates.html

Mike McKinzie · Answer

I own 30 houses in 6 states, and have NEVER seen 20 of them.  This is not a hobby for me.  This is not a job.  I ran a Property Management Company, back in the 1980s, so I know what to do, how to do it and how to handle anything.  I don't want to drive by a house and think, "I own that."  I don't drive friends or relatives by a house and brag that I own it.  Real Estate is exactly like stocks.  When I bought Disney stock, I didn't go down and tour their offices.  When I bought EMC Stock, I didn't go visit the factory.  When I bought RMCF, I didn't go down and visit their factory.  So when I buy a house, I don't go down and look at it, get all emotional about it and see if I "fall in love" with the house.

I started Real Estate investing in 1979, lost half of it in my divorce, and am now building it back up again.  This is a BUSINESS for me.  It is like owning a Subway Franchise.  If I owned ONE, I would be there every day, working my tail off.  But if I owned 50 of them, I have better things to do with my time than make sandwiches.  If I did own 50 Subways, and the entire lunch crew called in sick at one location, I might have to run down and make sandwiches, and it would be a hassle.  But I am sure not going to sell all 50 Franchises because I had to make sandwiches for a day.  That would be silly.

Ask the Big Guns on here, like Rich Weese, when was the last time he had to unclog a toilet or collect rent or show a vacancy.  I think Rich said he owns 200 rentals.  While he may have done those things recently, the point is that he doesn't have to.  It's a little tough to show a 3/2, $900 a month rental in Texas while you are on a cruise in the Mediterranean.

Account Closed · Answer

What if the prospect turned out to be a thief? He would clean out your house. Well, I guess you can buy them back on Craigslst.  :)

I know they like to use codes for keys on vacation rental properties.

It comes down to your comfort level and your end goal.  Investing in growing cities tends be more expensive so you'd have to sacrifice the yield in exchange for the potential of appreciation. Then it becomes speculating instead of investing. There's nothing wrong with speculating if you can make profit from it.

Just my 2 cents.

Aaron Mazzrillo · Answer

Live where you want. Invest where it makes sense. I don't buy into the philosophy about keeping things within 10 minutes or whatever time frame people consider acceptable. I have property on the east coast, west coast, down in Texas, and in the mid-west. I have some stuff I've never even seen. Plenty of sheeple willing to sell their time to take care of things for you. If you are looking to invest in B & C neighborhoods, I'm sure that is not your ideal place to live. So, buy them right so they can afford to pay for other people to deal with the issues and you won't have to waste your time driving out there to deal with nonsense.  The idea that you should only buy within so many minutes of your home is for people with small vision and those who are not investing in real estate, they are investing in creating a job for themselves.

Rob K. · Answer

What if a potential tenant goes to look at the house, decides they like it, and moves in? Now you have a squatter to deal with.

Account Closed · Answer

I'd prefer they are 20 minutes from where I live.  I'm in contract to buy a house that's 1 hour from where I live. Although it's a good deal, I'm having a second thought about it due to its distance.

When you're first started out, you're enthusiastic about it. After you've built up a decent portfolio, you're not as enthusiastic.  Well, at least for me.  So I vote for closer to home.

Nathan Emmert · Answer

Alright boys, drop em... lets measure!

As to the OP, I prefer close rentals as I'm new.  As such, I don't have a "team" to tell me good from bad.  I need to see the property, check out the neighborhood, evaluate the look, feel, and amenities to determine the value.  While I now outsource the day to day Property management, I'm not yet at a place where I can outsource the locating and just give my cash to someone to buy for me.

My rentals are about an hour from my house.  I can leave to look at homes when the girls lay down for a nap and still be home for supper.

Mike McKinzie · Answer

Ryan, I too have several family members who have six figure, monthly incomes.  Added up, they have over 200 years of REI experience and are just a phone call away.  My father, who just passed away this year, helped start the company called Century 21.  The Gold Coat was my father's idea.  He was a Realtor for 36 years.  I was a Realtor for 20 years.

But you told me that you suggest I "invest in other things."  Just because I don' t like to listen to a tenant whine doesn't mean that I don't enjoy investing in Real Estate.  I did that for many years.

I just thought it was a bit rude and presumptuous for you to tell me to "invest elsewhere."

Ryan M. · Answer

I don't have to ask a "big gun" I have 2 in my family, grandparents and parents. I'm not big on disclosing the number of units but its a few, ha ha. They spend there time enjoying life and family. But I'm younger and very much involved in it.

80 years of experience and there a phone call away or dinner every Sunday.

Ryan M. · Answer

Mike if that's the way you look at it, I would recommend investing in other things. If it's such a hassle why do it?

Mike McKinzie · Answer

If I had my choice, all my rentals would be on a different PLANET.  Unfortunately, I had to fire my Property Manager for my nearby properties, less than 10 miles from me.  So for the past two months, I had to personally collect rent and arrange for repairs.  When I showed up this past Sunday, September 2, to collect rent, the tenants asked me if they could have a FREE month's rent since they had been there so long.  In August, I spent over $25,000 putting a new roof on their property and now they want a free month's rent?!?  I wanted to slap them.

Therefore, the further away the better!

How close to your properties do you prefer to be

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