There are many advantages to broadening an investment portfolio by going outside your usual geographic area and getting started investing in a new region. There are different types of regions to consider.
1. A city close to where you currently invest.
This makes looking at potential investment properties and their neighborhoods convenient. It makes it easy for you or your property manager to stay "on hand" and to manage the new properties in the new region efficiently. You may handle your own property searches or work with a Realtor. Your current Realtor can probably keep representing you, so you do not need to find someone new who will have to begin learning your goals and preferences.
2. A more distant city that compares to your current region
You know your target market for tenants, or potential buyers if you are a "fix and flip" investor. This helps you choose a good new investment in a similar neighborhood. By going further afield, geographically, but staying with the type of community you already know, means future tenants and buyers will be like those you currently work with. Learning about a new city or county with its own local bylaws is part of changing regions. Breaking the mold completely and, basically, starting from scratch, may not be the best use of your time, and may result in making the sort of investment mistakes you could avoid.
3. Going out of state
There are many reasons for investing hundreds or thousands of miles from where you are based. You may want to get into the vacation or snowbird rental business. So, you may choose Arizona, Florida, or Colorado for example. These, and other states, all have a strong short-term rental market.
If you decide to go into this kind of market, it pays to:
Go online and research your market area. Make sure the counties, cities, neighborhoods, and subdivisions are investor-friendly and have a track record of supporting the short-term rental market. By going straight to the kind of property, its condition, price, and availability the way you would in your own region could mean you miss important factors. All states and cities have their own laws to abide by, so this basic research is essential.
Work with a Realtor with a track record of representing investors like you. They will automatically know where you should focus and where to avoid.
Know the overheads. In some areas it makes sense to take out flood insurance or wind mitigation insurance.
Know the local terms. Many people want to vacation on water. Does "freshwater" mean no direct access to open water, or does it mean it does not get tidal waters? Some older "freshwater" canals are stagnant at the head of the canal. Something as simple as that could damage rental income from what would otherwise be a good investment.
Investing in a new region can make good business sense. By deciding where the new region will be determines how much basic research you should do, and who you choose to represent you in the purchase and the ongoing management. When you find your potential property, please remember we are here to support you, so please just click here to contact us.