Location, location, location

[Bryan Bagge]

HI all,

I own a multifamily home in a nice section of town with a short walk to downtown in Newport, RI. This area is an hour away from home, expensive, but it offers great return and appreciation.

For my next purchase(s) I am looking at areas closer to my current residence in Southeastern Massachusetts for ease of maintenance and also extremely cheap properties. Multifamily homes are consistently listed for $100-200k and its very tempting to want to jump right in. The economics of the area is drastically different, however at that price properties can still cash flow.

An experienced family member told me that just because the numbers make sense, doesn't necessarily make it a good investment. In lower income areas, the biggest concerns brought up were quality of tenants (how they will treat the property and ability to pay rent on time), and also the limit of potential value. His opinion was that its better to own the worst house on the nicest area, than the best house in the worst area. I agree with that philosophy, however I am eager to jump on a deal and continue to build my portfolio. With the money I have saved, my options seem limited to the lower income areas. Do I continue to save and buy a building in a more stable city? Do I act now and invest in a cheap city?

I am 23 years old and willing to work hard to continue to purchase the right properties. I am looking for advice on peoples experience/thoughts/recommendations for a young investor with about 20k in savings.