For the past few years, there has been a trend for people to invest in houses far from their home stomping grounds They are usually lured by purported rents that are high relative to the money invested. What I find most interesting is that they take this plunge with far less due diligence or negotiation that they would use if they bought a house where they live. As a result, there are hosts of unhappy people who are stuck with houses that are either being handled by indifferent property managers, or that are sitting vacant, not being managed at all. Now these same investors can’t understand why they are having a hard time selling to recover their investment.
It seem never to have occurred to them that they might be the final owner in the greater fool parade. I can speak with some authority on this subject because I too succumbed to the blandishments of persuasive hustlers who got me to invest in properties that I didn’t understand. Dare I mention Pennsylvania townhouses, a Mississippi warehouse, Maine and Bahama water front lots, a California office block, Arizona land, Georgia timberland, Texas apartments, Hawaiian paradise lots, etc.? And that’s only a partial list of my many misadventures that might have been prevented if I’d stayed at home and learned how to make money in my own market.
From this I’ve gleaned a valuable insight. Real estate success is far less a matter of geography than it is a matter of know how and savvy. I didn’t stint on my education, but I did stint on my imagination. If I’d made an objective analysis of my own market, I’d have realized that if I couldn’t sell a house, there were others in worse shape than me who also couldn’t sell, and who might have been happy as clams lease/Optioning their vacant houses to me. If I couldn’t find institutional financing, couldn’t I have surmised that others in similar straits would have paid high interest to someone who could have found private investors to lend them money? If I didn’t like management, how many others in my area hated it more; and how many of them would have been willing to master lease their properties at rates that would have produced high cash flow and Options for me?
Bottom Line: Before you rush off to the hinterlands seeking your fortune, pause a moment and examine just why the unknown seems more attractive than your local situation. Are you being “sold” on going out of State by someone who is going to make a profit getting you to buy property he has rounded up? Do you have any kind of personal connection with the area into which you want to venture? Have you fully explored all of the possibilities where you live? Have you invested in your own self to learn all that you need to know to make money? Maybe pondering these things will save you money that could easily be lost when you invest in properties and areas outside your own experience.
