Renting in home market, while investing elsewhere

[Christian Austin]

This thread was prompted by the discussion in "To buy or not to buy owner occupied multi-family in Boston suburbs" on continuing to rent in an poor investment home market while owning cash-flowing properties in a good REI market. Although I understood that this strategy could work financially, I was originally not keen on this idea. After feedback from BP members, in particular @Ziv Magen, and becoming frustrated by the Boston market, where investment properties that barely make financial sense at list price are going for $10's of thousands over, I am seriously considering continuing to rent while investing out of area or state, rather than overpaying for a property where I live.

It appears that some people on BP have used this strategy. I'm curious what the experience was/has been like for those that have taken this approach. Where did you invest? Somewhere you were familiar with or completely unfamiliar with? How did you put your team together to purchase and manage the property? I'd be interested in hearing other's stories and recommendations.

[Marco Santarelli]

Hi Christian Austin,

Welcome to the "club" -- specifically I'm referring to those of us that live in an expensive market (like California, New York, New Jersey, etc) and are "forced" to invest out-of-state in order to get favorable cash-flow and rates of return.

As I like to say, "Live where you want. Invest where it makes sense!"

Living in California, I can tell you that I've been an out of state investor since early 2004 and the reasons are very clear. In fact, a large percentage of California investors place their capital in other markets so they can better leverage their investment capital.

I've invested as far south as Florida, as far north as Michigan, and as far west as California. I was not familiar with these areas at first, but that's where your due diligence comes in. There is a lot of information available to you to do that successfully.

Putting my team together got easier as I went along because I learned what to look for. It's not difficult, but you need to be clear on what you're trying to accomplish (you investment goals). The most important team member, in my opinion, is your property manager. You need a full-time, competent, professional management company to manage your asset(s)!

Feel free to post any other questions you have.

Continued success!