How far away should I look?

Question

I am currently living and going to school in Columbia, SC. I am looking for a single-family home or a duplex with positive cashflow for my first property. Something I can buy and hold. Once I get the hang of it I will start looking for larger deals, but I thought this would be a good place to start and not as punishing when learning from my mistakes. However, Columbia is not exactly an Atlanta, GA or Charlotte, NC and I was wondering if I should focus really hard on looking for a good property in my area or would it be worth going farther away, to say Charlotte(about 1.5 hours away), with a higher work force and most likely a higher demand for housing. I just wanted to get an idea of what everybody thought. Thanks ahead of time for all your answers.

Chris

Aaron Mazzrillo · Answer

Even the best property managers have issues. I'm on my 4th at one property and lately he's been heading down hill. He used to be my #1 guy.

I'm still using the same company out in Austin. I think they do a top notch job, but every once in a while I get a bill for repairs that makes me fire off an email.

I don't mind being in 5 states. I would just prefer to keep my cards closer to home. I have different asset classes in different states so there is a reason I am so spread out. As I get a little bit older, I day dream about a simpler life, that's all.

I like James Vermillion's idea of buying a duplex and living in one side. When I first started out, I was looking at 4 unit apartment bldgs in Huntington Beach. I could have picked one up in the mid $500Ks, but at the time I was a little gun shy about taking on that much debt for my first property. A few years later the boom hit and there wasn't a 4 unit in that city selling for under $1M. Live and learn.

Aaron Mazzrillo · Answer

A seasoned investor once told me (actually he used to say it all the time) why look across town when you haven't looked across the street! I am sure there are deals in Columbia. Maybe it will take you a little longer to find what you are looking for, but I'd rather have an investment locally than in another state. I am currently in 5 states and relish the day I can get rid of 4 of those.

Paul Timmins · Answer

Chris

Stay where you are going to school.

One call to the college off-campus housing office will tell you where students like to live whats included and what they pay.

Line up a property in the area with as many bedrooms as possible, rent to fellow students per bed instead of per unit. You provide cable internet and utilities they pay one check for living you collect 2-4 times the rental income. You live for free and make some cash.

BTW you don't have to own it to control it.

Paul

Chris Duzan · Answer

Maybe I should give it a chance and look some more into it. I live right off of campus and after being here for 4 years I kind of know what a lot of kids are looking for. Thanks!

Roger Blankenship · Answer

No I haven't but that's because I'm more of a bottom feeder when I purchase. I buy distressed or foreclosures and there usually aren't many of those around college campuses, especially big schools. However, my daughter rented a house while she was at GA Tech and I analyzed her landlords numbers and it looked like a good thing. I also have a friend who does this exclusively - he just buys whatever he can find near an SEC campus and rents to college kids. He almost doesn't care what he pays - he says he is doing very well.

Chris Duzan · Answer

@Roger Blankenship

Have you ever rented to any college students? The thought of it sounds enticing but I feel like I'm always hearing horror stories about it too. Just wondering your thoughts on it. Seems like you would have a lot of problems with it.

Roger Blankenship · Answer

Buy something near the USC campus and rent to college students!

Jeremy Vogan · Answer

Many builders these days are offering new construction rentals with attractive guarantees that make it possible for investors to move into whatever markets they choose with confidence. Marco is right, it's a very plausible strategy and now is a good time to invest. Also contact local brokers for off market deals.

Chris Duzan · Answer

Thanks again for everyone's answers, they have been really helpful and I've been really thinking this through.  I just have one more question.

If I will be living in the same building I'm renting out, say a duplex or 4-plex, would it make since to still use a property manager or would I manage it myself?

Marco Santarelli · Answer

Hi Chris Duzan,

Welcome to BiggerPockets!

Congratulations on starting at such a young age.  I bought my first property when I was 18 and did very well.  The only regret I have today is selling my first property.

If you're a buy-and-hold investor, I suggest you "Live where you want.  Invest where it makes sense."  I also don't recommend managing your own properties regardless of where it's located.  A good management company will do a better job than you will and over the long term will be very valuable to you.

There are many good markets around the U.S. today, so don't limit yourself.  You may want to download my '2013 Housing Market Forecast' to give you a good overview.

Feel free to post any questions you have.

Continued success!