Which market to invest in, if you could choose from entire country?

[Mohit Madaan]

As the title and category of the forum suggests, i am foreigner investor who is going to invest living in another country and while this may sounds challenging to some, i personally feel i am more than ready. I am 28 years old, have experience investing in real estate in my country (India) and have some finance to give myself a head start. Now, here is the real question:

I have a partner from another business who lives in Stockton, CA area. He is been my partner for last 9 years and we have enjoyed working with each other very much, and there is nothing we can complaint about in our business relation. The ideal situation for me is to start in his market because that's an area i visit anyway few times a year and starting with a multi family apartment complex there won't be that bad. He is also interested in real estate investing and knows most of the local big players. So the benefits of starting out in the area are obvious. The biggest one for me is "foot on the ground". But, as alot of people would agree, stockton isn't the best market for real estate investing. The city itself was bankrupt couple of years ago, it was the hardest hit market by the crash in 2008, not enough jobs, etc etc.

On the flip side, if i want to go out of Stockton, San francisco & Chicago are pretty much same to me, well they are both about 24 hours plane ride away. The partner friend of mine wont' really like to drive by my property even if its 2 hours away, so i am pretty much own my own if its not in Stockton, Tracy, Lodi, manteca, Sacramento area.

Please comment and advice on what do you think about the situation and how would you approach it?

[David Nolan]

@Mohit Madaan there are lots of unknowns in your scenario to be able to give a definitive answer but the basic fundamentals of property investing might help get you started. When selecting a market to invest in I personally want to be in a market that is at or near to the bottom of its cycle in terms of prices. Buying in markets that are "hot" or near the top of the cycle is risking a loss in the short term. It is important to understand that ALL investment markets are cyclical and go up and down over time.

Based on the concept of markets being cyclical I would suggest researching the markets that appear attractive to you based on your investment capital and looking for ones that are at the low end of their cycle. Once you have identified these markets then I would suggest you look for property where you can add value immediately. That is to say that you want to know that you can improve the value of the property by your own efforts and not simply rely on the market to improve to increase your asset value. This will give you increased value in the short term with the potential for future capital growth as the market improves.

Like you I am also a foreign investor so I will assume that you have already investigated the taxation and legal issues relating to foreign investors. If not, then you definitely should seek quality legal and taxation advice before investing a single dollar. Understanding the international treatment of taxation can be the difference to making money or losing it to government regulators either in the USA or in your home country.

In regards to feet on the ground I would suggest that once you have identified your market that you seek referrals from the many highly experienced and supportive members that operate on BP. I have no doubt that you will be able to find all the help you need right here on BP once you know where you want to operate and what you want to invest in. The first step however is for you to understand your investment objectives and to do your own homework about what investment will suit you. If, on the other hand, this is all too difficult or time consuming and you want an easy way to invest then seek out quality partnerships or joint ventures with people right here on BP. 

There are a number of highly experienced investors that I am sure would welcome your interest in their projects. Sometimes the best returns are made when you employ the skills of experts and reduce the risk component of property investing. Many inexperienced operators discover the cost of risk is a lot higher than they might think but only after they have lost their money. One way to reduce this risk is to partner up with people who know what they are doing. It is also a good way to learn about the markets in the USA in real time by following their footsteps.

Hope this helps.

Happy investing!