New investor: invest in local properties or remote ones

[Benjamin Ertl]

Hi BP community,

Over the last two weeks I've really taken an interest in real estate investing having listened to over 20 of the podcasts and reading my fair share of articles (a.k.a I'm a newbie).  I'm currently undergoing the process of pre-qualifying for a loan for about $100,000 just so I can start seriously shopping.

I currently live in the Kenosha, WI area where there are relatively affordable home due to being sandwiched between Chicago and Milwaukee.

Despite this, I've spoken with a couple real estate agents in the area that say multi-family homes are rarely in my price range and foreclosures get swept up quickly before investors can participate.  Single family homes usually go for my price range but not multi-family.

There's a city southwest of me (Rockford) which seems to have decent amounts of inexpensive multi-families within the inner-city.  The 2 hour drive though wouldn't be worth it to me.  

So my question is ... does this 2 hour distance make it significantly harder to check out, buy, manage, etc properties as a 1st time buyer?  Or is it really all about the expenses/value as long as things are well managed?

Thanks in advance!

[Cody Barrett]

Hey Ben. I live close by here in Racine.  

I wouldn't eat everything those realtors are feeding you.  Deals always have a number and depending on what you bring to the table, anything can happen!!  I don't care where you are.  I actually could only qualify for a 100k loan with a bank and was exactly in your position these past few months.  I actually closed on a duplex here in Racine just last Friday, 2 days ago, lol... It was my first one ever, never purchased a property for myself and became a Real Estate investor all because of Bigger Pockets.  I learned everything that I currently know, (so much more to learn lol) right here and from these awesome experienced investors.  

SO to say that you can't find a duplex or solid investment on the foreclosure market or MLS is not the truth. I found my duplex on the MLS for 97k and after negotiating for a week, got him down to 89,500 and it is in wonderful shape too!! Just some updating but the repairs are extremely minimal. I got lucky, one can say, or I just searched every day until I finally found the winner. I crunched numbers with the BP calculator all day on multiple listings. It only takes 1, my friend, to get started! Keep looking in Kenosha and Racine and of course where ever you wish to hunt.

To answer your question:

Distance definitely won't make it easier on you as a first timer.. Ask yourself how you would handle a maintenance call, repairs, an emergency, doing quarterly walk throughs, managing the tenants, and researching the market area to figure out local rent rates and what other properties look like inside/what they charge, etc... If the distance would take you away from growing your business  then it might be too much at this stage.  Personally I would stick close by since there is a lot to offer in my opinion as far as prices go.  The markets are getting warmer in Racine and Kenosha as the weather warms too ; ) but I wouldn't say that takes away all the deals under 100k..  The economies aren't booming here like that... Hopefully soon though once Gov Walker takes a fricken hike!!! haha!

Well good luck, PM me if you need anything! 

Cody B