Should I start in a different location first?

Question

Hello All!

I had a question for everyone here and wanted to get some opinions on the topic. I currently live in Madison, WI (Verona to be exact) and I want to get into the buy and hold aspect of REI.

Ideally, I would like to live in one unit and rent out the other; however, it has been quite a challenge to find any kind of property that isn't super expensive, and will return some good rents...

End of the day, I love Madison and would like to stay here. I just can't find anything! Maybe I'm not looking in the right places? I've tried Craigs List, realtor.com, and Zillow.. I'm sure I'm missing something.

Anyways, if I were to go an hour south of me to Rockford, IL. I'm finding a ton a duplex properties, and more specifically I'm finding them at really low prices :) Now I understand that the location could be terrible, and I'd obviously do my due diligence to make sure the location and tenants are solid before I made a move...

My question is... would it behoove me to start off in Rockford as I'm only 26 and want to start off with cheaper property with greater returns? That way I could get one property live on the one side and fix it up and then grab a new property every year... live in it then move.

Once I get up to 5 properties I could hand it off to a property management company. Then maybe move back to Madison and deal with more expensive properties.

Overall, I'm sick of working in a corporate environment and I want to start REI ASAP! I'm super handy and I would love to just work on fixing up properties and living in them and making money all at the same time.

What do you all think? Thanks for any advice!!

Dawn Anastasi · Answer

I know of someone with a 2 bedroom condo in Madison who is desperate to sell.  I haven't been able to do anything with that lead so far.  Not sure if it would help you.

But yes, Madison is more expensive. Milwaukee is pretty cheap.

But at the end of the day, where you live is an important part of one's life.  Don't sacrifice one area of your life to gain something else, because then you're not getting anywhere.

Christopher Dumelle · Answer

Seth B.

That said I would highly recommend "starting out" in  your own backyard.  It makes the learning process much easier when the property is close by.   My first rental is about an hour and a half away and it has posed a lot of unnecessary challenges. @Gerard DuMelle can attest to that as well.

Elizabeth Colegrove · Answer

Seth B. Make sure you hook up with a "good" real estate agent. All of the deals I have found in California were either from the mls or pocket deals from my realtors connections. I have found using a realtor to be very helpful. This area experienced a large collapse during the house bust. Many homeowners think that their house is worth more than market price. Therefore I have been more successful having a realtor speak to the potential buyers than myself.

Dave Carpenter · Answer

Seth B. have you talked with a real estate agent yet. Zillow and other websites are good, but getting an agent actively looking for a property that you have well defined (price , area, size, amenities) may help you confirm there are no duplex's in your price range. My first purchase was a duplex in Milwaukee about 30mins away from where I was living. The area I lived was too expensive to buy in for me and so had to find a different area. I had and agent help me. Once you start finding deals (ideally in the Madison area) start throwing them up on BP for help analyzing.

I don't know much about the Rockford area, but I do know Madison would be a great area to have a duplex. Lots of post grads like us who want to keep renting.

Good luck and if you are in town or want to talks a little road trip you should head over to Milwaukee on Saturday, Nov 2  for our BP meetup . Would love to meet you.

Dave

Seth B. · Answer

Thank you everyone for you advice I really apprecieate it!

One thing I'd like to point out before this thread goes down a different road is that.... I'm kind of bound to my location.

My fiance just recently got a new job around here (hopefully she'll do well and maybe we'll have the extra money from that?) Also, we plan on starting a family within the next 5 years and would like to stay close to family.

So with that being said, should I start looking at towns around Madison? That seems to be the general idea that I'm picking up so far.

Shawn S. · Answer

I live near Madison.  I can never see investing anywhere around where we live.  Not only are the properties really high relative to the rent you will get, but the taxes are double at least what we pay for similiar priced properties where we invest in KC.  If I were your age, interested in really doing RE, and open to moving anywhere, I'd do the research and find a totally new location.

Xing Zhu · Answer

If Madison is too expensive for your real estate investment, you have no choice but to  do it in a different location. At your age, you never know if you will live in many different cities in the future. I have lived in many different cities (including Madison for a year) in different countries and I did not find moving a problem. Instead, I found that moving made me feel more energetic and living in different places left me a lot of wonderful memories.

Ramon Jenkins · Answer

My picks would be :

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

1st -  Madison , if you can work things out

2nd - Waukesha county ( shorter driving distance )

3rd - Milwaukee county ( I know several individuals who

reside in the capital, but own properties or rehab in brewcity )

Negative about 2 hour drive - once or twice a week ?

4th - Rockford

I'm not to sure, but employment environment might be an issue

Just my two cents

Jean Bolger · Answer

I don't know the WI market but I do have relatives in Madison and Green Bay and Appleton. Madison seems like the most expensive area in WI, hands down. It's also probably the funnest town to live in- not a coincidence, I'm sure.

If you can stand to make the change in lifestyle you would probably come out financially way ahead by making the move. This is a great point in your life to be doing this, and a great point in the real estate cycle. (And if you get wrapped up in fixing up properties you won't have time to go out anyway, haha!)

Make sure you are being realistic about the rents and vacancies in Rockford or wherever you end up. It's probably a whole 'nother animal than Madison, so do lots of research.

Should I start in a different location first?

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