Close and expensive, or cheap and far?

[Gere W.]

Hello,

I'm from Buckeye Lake, OH. I'm looking to invest really anywhere in Ohio. Closer the better, but if it's a good deal and the numbers are good, then that seems good too.

I'm looking for multifamily properties in Columbus, OH or Sandusky, OH.

Columbus: closer to me (35 min), more $ to buy, most don't meet 2% rule, but around 1%. Industry seems to be growing and so is population. With higher property cost, would be harder to cash flow well. Properties I'm looking at are average to just below average. 2/1 goes for around $500-700 neighborhood depending. 

Sandusky: farther (2:45 hrs), less $ to buy, most exceed 2% or are close to it, not sure if industry is dying or growing, neighborhoods are C-B, but seems mostly poverty, and not necessarily surrounded by worse neighborhoods and other crime. Just kind of a small lake town. I sail up there occasionally. Properties are average to below average. Rents for 2/1 are again $500-750 depending on building. 

Better to go in on something cheap, with decent quality and potential to make better, better cash flow, but potentially dying city and a little farther (3 hrs)

OR 

something closer, less cash flow, higher mortgage, but more/growing city stability?

If I'm cash flowing well, does it even REALLY matter? 

I'm conventionally financing, plan to buy and hold, but don't have much capital (around $15000) to invest. Cheaper, potentially higher cash flowing area seems better option as of right now. 

Thoughts? I'd appreciate any. Thanks. 

[Marc Winter]

The 2% rule may work on paper and spreadsheets, HOWEVER, if you are in a c class or lower area surrounded by even lower-end properties, that 'extra' cash flow can evaporate with lower quality tenants, more repairs, higher turnover, slow or no-pay occupants, etc.

The trick is to get a deal where you have a good neighborhood, good schools, pay a reasonable price, and make sure you can 'value-add' to boost your returns.