Focus on one area or diversify?

[Tyler D.]

I recently close on a great deal in a small town that I think has potential for growth. It is about an hour away from a much bigger city that residents have been moving away from to escape increasing rents.

I am considering buying more property here, because due to the small size of the city I could control a lot of the market, and there are a lot of great deals, unlike just 30 minutes away where prices are much higher. However, there is the possibility that jobs die off and everyone leaves, leaving me holding the bag.

I have considered spreading out my investments over several cities to hedge against a single point of failure, but doing so would mean settling for higher prices without much of an increase in rent. Your thoughts?

[Theresa Harris]

If you are going to have rentals in different places, you should be choosing those places to maximize your returns.  There is nothing wrong with having your investments in one general area, so you can manage them yourself. This doesn't mean they have to be in the same town, but maybe a set radius (e.g. 1 hour drive) from where you live). Yes if the market goes down, you will be more affected but that's one of the trade offs and you'd be able to save money by managing them yourself.