Benefits to investing in multiple markets

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Benefits to investing in multiple markets

Maxwell Lee
Real Estate Investor · Miami, FL · Member since 2013 · 474 posts · 214 votes

Hi All, 

Just curious about the real benefits (we can get to the difficulties later) in investing in multiple markets. We have properties in various cities by default, but as far as intentional, strategic real estate investment, we have focused entirely on my home market of Jacksonville. 

Jacksonville still provides us with the type of investment we seek, but certainly not as awesome or abundant as it was a few years ago. I know the Jax market extremely well, so assuming I study and understand another market sufficiently but still not as well as Jax, is there any point in diversifying? If so, is it more beneficial for the other market to be of a similar type (low cost, cash flowing) just in a different region, or one that offers a different type of potential (like more dynamic appreciation)?

I'll toss out a few thoughts I've had: 

1) I get to write off more travel :p 2) I bring other investors with me. So if I can get comfortable, knowledgeable and adept in a new market then that would open up more options for my investor partners as well. 3) We are ever so slightly shielded from some catastrophic event occurring in my primary market.  

tl;dr, For those of you who purposely invest in many regions, why do you do it? 

Thanks!!

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  • Eric M.
    Jacksonville, FL · Member since 2016 · 23 posts · 2 votes
    9y

    I invest in a different region because of price points in different markets.  Being military I move often and have learned that the areas around certain military bases are good for buy and hold.  To me the biggest benefit I've found is that in certain regions I can purchase a duplex for the same price as a single family.  

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  • Maxwell Lee
    OP
    Real Estate Investor · Miami, FL · Member since 2013 · 474 posts · 214 votes
    9y

    Thanks for sharing your thoughts, @Eric M. And thanks for your service too! I'm not understanding your explanation. To me it seems you invest in different markets cause you are forced to move to these different markets. If being able to buy a "duplex for the same price as a single family" is a big benefit, wouldn't you just focus on that area only? 

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  • Eric M.
    Jacksonville, FL · Member since 2016 · 23 posts · 2 votes
    9y

    Yes.  I have begun focusing on that area.  This week I put in offers for two duplexes in that area.  Originally I was an accidental landlord because my condo in St. Johns Town center was because my baby brother was a UNF student. My home in my previous NC duty station was because mortgage payment was cheaper than rent.  After getting some education on BiggerPockets podcast and these forums I've learned where and how I like to invest.  I have been in New Orleans 4 months and this market is unappealing to me at this time. Being forced to move I have lived in different markets and of those in which I've lived I decided that NC is priced right for me.  

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  • Marty True
    Rental Property Investor · Miami Beach, FL · Member since 2015 · 227 posts · 106 votes
    9y

    Hi @Bilal Saleem I'd like to connect with you -I have an interest in investing in the Caribbean. I've mostly been considering the Dominican Republic but have also considered Belize and the Bahamas.

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  • Ethan Lee
    Jacksonville, FL · Member since 2016 · 76 posts · 130 votes
    9y

    My business partner lives in South Carolina and I am moving to Jacksonville in a month. We both grew up in Delaware and started investing about 6 months ago. So far, we have a couple of properties bought/under contract in Delaware and a couple in South Carolina. The plan is to actively grow our portfolio in all three locations. We'll have boots on the ground in all three, and we like the idea of diversifying to protect ourselves if something goes wrong and capture some growth if one market appreciates. We're both competitive so we see who can find the best deals while pushing each other to work hard since we're 22/23 years old and both working full time jobs. In the end, being in three markets is more work but allows us be more selective and only move forward on great deals.

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  • Maxwell Lee
    OP
    Real Estate Investor · Miami, FL · Member since 2013 · 474 posts · 214 votes
    9y

    @Eric M. Gotcha. That makes sense. Good luck to you!

    @Ethan Lee Nice plan! I think it's great that you are investing in areas y'all know and also awesome to have a partner that's pushing you. I like that you say it allows you to be more selective. I hadn't thought about that. What's taking you to Jax?

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  • Ethan Lee
    Jacksonville, FL · Member since 2016 · 76 posts · 130 votes
    9y

    @Maxwell Lee a few reasons but mainly to be closer to family and eventually go full time into real estate. I visited family in Ponte Vedra Beach every summer growing up and I always loved it. My wife and I moved to Los Angeles a year and a half ago - we still want to be in a warm climate but we're excited to live in a place much more reasonable financially!

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  • Leslie Pappas
    Professional · San Francisco, CA · Member since 2014 · 876 posts · 301 votes
    9y

    It can be safer to diversify your investment properties across the country. Choose cities in safe and economically diversified areas with above-average income and population growth. 

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  • Maxwell Lee
    OP
    Real Estate Investor · Miami, FL · Member since 2013 · 474 posts · 214 votes
    9y

    Thanks for the reply @Leslie Pappas

    @Ethan Lee Cool! Good luck and hope the move goes well!

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  • Maxwell Lee
    OP
    Real Estate Investor · Miami, FL · Member since 2013 · 474 posts · 214 votes
    8y

    Hey guys, a year later and I'm back! Took me 10 minutes to find this old thread :)

    Anyway, as an update we diversified geographically by investing in Indy. We consolidated as well by selling the DC properties and next week the Tampa one will be sold, putting us roughly at a 60/40 split between Jax and Indy. Our activity in Indy, however, is nearly a carbon copy of Jax. sub 100k rehab properties, good cash flow, gentrifying neighborhoods where we expect to see above average, steady appreciation. I will continue to seek rentals and flips in both of these markets, but now I'm pondering the next step (if indeed one is needed)

    I've described in a different thread my desire to reenter a major, potentially high-appreciation urban market. This is something I'll keep my eyes out for and perhaps be ready for during the next downturn. But in this thread my question is whether it would be worth the hassle to enter more markets similar to Jax and Indy. 

    Anyone out there who has taken a DIY approach to REI (ie not through turnkey companies) and is actively investing in 3 or more markets (meaning not just holding rentals from once upon a time but still looking and buying in at least 3) care to chime in?

    I don't want to do it for the sake of doing it, but rather because there are tangible benefits. It seems the cons are rather obvious (diverting my focus and attention, having to find another network of professionals I can trust, less economies of scale, more travel) and I'm not sure there are a whole lot of benefits. Fwiw, one of the reasons REI has been such a good fit for me is that I am an avid traveler and passionate about cities/urban planning. So I already spend a lot of time studying cities and their history, touring neighborhoods, analyzing how they've developed and progressed, and all that jazz. I've spent years doing this in dozens of cities across the country so it's definitely a passion independent of my passion for real estate.

    Look forward to hearing the community's thoughts, especially from the folks investing in many markets. Thanks!!

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