Hello @Kevin Burke,
You seem to be on the right track. It is a big leap to accept that there may be a better investment location than where you live.
Instead of networking, I propose the following steps.
1. Goals
Clarify your goals. Clear goals give you a yardstick by which you can evaluate decisions. If your goal is a dependable passive income that will get you off and keep you off the daily worker treadmill, you partially defined the location requirements.
A dependable passive income is -
- Reliable - You continuously receive income in good and bad economic times.
- Inflation Compensating - Your rental income grows faster than inflation, compensating for rising prices.
- Persistent – The income continues for a long time; you and your spouse will not outlive the income.
2. Location
The location determines all long-term income characteristics. Top location selection criteria are:
- Pre-COVID rents and prices rose faster than inflation. Dollar bills have no value by themselves. Dollar bills are only worth what you can get in exchange for them. Every time you go to the store, buying the same basket of goods takes more and more dollars. Unless rents increase faster than inflation, you won't have the additional dollars you need and will soon be back on the treadmill.
- Population Size - Greater than 1 million. Small towns may rely too much on a single business or market segment.
- Population Change - Both state and city populations are increasing. Do not buy where state or city populations are static or decreasing.
- Low crime - People with sufficient income will move away from cities with high crime levels. Companies will not choose high-crime locations for new operations. Eliminate any city on Neighborhood Scout’s 100 most dangerous cities.
- Low operating cost - The two most obvious are property tax and insurance. High property taxes and insurance are a direct hit on cash flow.
3. Tenant Pool Segment
The only way to have a dependable passive income is if a dependable tenant continuously occupies the property. A dependable tenant is someone who:
- Has stable employment in a market segment that is very likely to be stable or improve over time
- Pays all the rent on schedule
- Takes care of the property
- Does not cause problems with neighbors
- Does not engage in illegal activities while on the property
- Stays for many years
Such tenants are the exception, not the norm. In Las Vegas, most tenants that meet all the above requirements are in a single segment. We’ve targeted this segment for 15+ years. The results are -
- Our average tenant stays over five years.
- We've had five evictions in the last 15 years (over a thousand tenants).
- 2008 crash - Zero decline in rent and zero vacancies.
- COVID - Almost no impact
- Eviction moratorium - No impact
4. Property
All property characteristics were decided when you selected a tenant pool segment. Buy properties similar to what they are renting today. There is no other option if you want this tenant segment to occupy your property. However, there is more to consider. See the image below.
If you follow the steps I outlined, your odds of consistently buying dependable passive income properties are excellent.
