How small an area should I focus on?

[Tom Scott]

The town I am searching for properties in is Gainesville, Fl., It's not a small town, but not huge either. Property values in the middle of the most densely packed zip codes (I'm focusing on 3 or 4) seem to be pretty similar when you look at price per square foot and some of the other metrics. Basically in these 3 or 4 zip codes you find mostly similar houses that only really differ in size (i.e. all have similarly sized lots, most are SFR's etc.). As you move out from these ares you still find really nice houses, but the values begin to fluctuate. Finding comps isn't necessarily hard, but you begin to get vastly different numbers for houses that are pretty similar.

Given that I am new to this and want to minimize my risk exposure on my first rehab deal, my first intuition is to just focus my search in the zip codes I can easily comp out and I know will limit my risk of basing my decision on bad data. I may even cut back to 1 or 2 zip codes to further reduce my risk but my fear is that I will pigeon hole myself into a certain area and slow down my progress. So my question is how focused is too focused?

Tom

[James Vermillion]

I agree with Jacob. When we started we stuck with the areas we knew, but as time has gone on we have found we have learned more and more about surrounding areas and we are more confident in being able to comp areas outside our original investment area. Recently, we have invested in towns outside our original area due to increased competition where we were, but I am not sure we would have had the success started in these areas from the beginning.