living in investment area...

[ThomasLorini]

A question that just came to me and thought I would post it....



Who actually lives in the area they invest in? ... perhaps I should re-phrase this as

How important is it to live in the area you invest in?



Just starting my DD process and wanted to get some insight....



thanks in advance

Thomas

 

[HemantPatil]

Hi Thomas I am a new member as well (My first meeting was in Dec.)and I think that as long as you are following the REIN system and making sure that you are doing your due diligence and not putting your brain in messing up with the system, it does not matter whether you live in that area or not. The kit, specially the audio CDs wil help you a lot. I would also recommend to read Don Campbell's books, 97 tips, success stories and you will see that veteran members are investing successfully all over the place without physically being there. Look forward to see you in the next meeting.

 

[lanedry77]

Hi Thomas,



I invest almost exclusively in Calgary, the city I live in.



But... it's not because I live in Calgary that I invest here, but rather that Calgary meets my needs for an economically strong city, and it so happens I live here.



I just sold a property that we owned for about four years located in Edmonton. I never once physically visited the property. Sure, I saw pictures and reports when buying, but I never so much as drove down the street.



so invest where your money will work the hardest. If that happens to be in your city, resist the urge to self-manage, and resist the urge to 'check in' on the property. You'll do it, just don't let it get out of hand.





Thanks,



David.

 

[jarrettvaughan]

Thomas, many investors do not like to invest in the area that they live in because of the added stress. Depending on your personality, you may be inclined to continually drive by the property, stressing about how the tenants are taking care of your landscape and other such things.



I have some properties in my home town and some in another province. As was previously mentioned, buy in a town with strong economic fundamentals. Where you live has very little impact on your decision..........unless you are planning to manage it yourself.



There is something to be said about managing your first couple properties for educational reasons. There is a lot of value in getting your hands dirty in management which will give you a stronger understanding when you hire a property manager.

 

[thejules]

I live in the area that I invest in. I like checking up on things on a regular basis. But, that's just me. I know there are a lot of REIN People whom invest in entirely different parts of the country, let alone where they live. For the most part, it really depends on your abilities to organize your team of experts and how much you want to keep an eye on things.

On a side note: I saw your message in reply to the Commerical Investing Course at UofT. I am trying to arrange my schedule too. Keep me posted on your scheduling.

 

[bizaro86]

[quote user=thejules]I live in the area that I invest in.


I do as well, and I like to for a number of reasons. The first reason is that I believe in looking in someone's eyes before I hire them to make decisions for me worth thousands of dollars. Since I invest in the city I live in, this doesn't cost me $$ in travel expenses.



I also find the process of keeping up with new developments and evaluating neighbourhoods easier and more intuitive here than in other areas. This can be a potential downside, as it is unwise to let potential preconceived notions cause you to miss an area in transition. This requires the objectivity to evaluate neighbourhoods not as if you'd be living in them, but for the purposes of rental income and appreciation.



This emotional maturity to distance yourself from what should be an intellectual process is also required (as mentioned by others above) regarding the management of your property if it's in your own city. Wasting time on unnecessary monitoring could be a risk for some, if they're inclined to micro-manage.



Finally, I like investing near home because I like to buy ugly and improve for better rents, and I prefer to do the work myself. This wouldn't be an issue, except I have a day job, and would find it not very practical to take off the 2-3 weeks it takes me to renovate a suite at the drop of a hat. (I suppose I could do it in less time if I did it all day as well, but I like to save my vacation time for --- Vacation!)



I hope some of that helps with your thought process.



Regards,



Michael

 

[ThomasLorini]

Excellent feedback! Thank you all.



Thomas

 

[housingrental]

It is very easy to make a mistake when investing

If you live in the area, you reduce the chances of this as you likely have more knowledge of particular strength's weakness's, etc.. of the location that someone from a different city might not pick up on

If you choose to invest in an area where you do not live ensure that you spend the time to have some expertise on what you are purchasing - tenant profile can vary materially from one part of a street to the next - and that you have a strong team to assist you on anything that might come up

 

[RussellWestcott]

Bottom line:



"You work hard for your money have your money work hard for you... Invest in the regions with the strongest economic fundamentals for future growth".



Now the million dollar question, where are those regions? This is where each investor has to perform their own research (with the help of tremendous resources like this site).



Research, and finding the best areas are the reason why the Property Goldmine Scorecard was created. Use this tool and you will increase your chances of success.



Stay on top of the economic fundamentals, and being educated on an ongoing basis, is critical. REIN` members know how important keeping up to date with the economic indicators are to their future success.

 

[dcaz4moores]

Thomas...great question and it appears you have some great responses. I have heard from both camps on the issue (keep a distance so the geographical stress can be reduced...being told that being to close to your property can cause loss of sleep at night every time you have a negative drive by. OR being in close proximity...say within an hour of your first few purchases will allow you to acquire valuable skill sets that will aid in purchasing further out from your concentric comfort zone)...but I am so new to this I am just regurgitating what I have been reading.



There seem to be excellent people, willing to offer sound advise on this forum.



Regards,



Dave.

 

[kboughen]

Hi Thomas,



I like to be close enough to drive to my properties when needed, but far enough away that I am not tempted to be the Property Manager, dealing with regular routine items. Aurora is within driving distance of all of Ontario`s Top 10 towns, I would focus on picking the right properties in the right areas, in one of those towns. Of course this is a personal preference; I have many successful clients purchasing properties outside of their home Province.

 

[Thomas Beyer]

[quote user=ThomasLorini]How important is it to live in the area you invest in?


It helps to be close to your (existing or potential) properties in the beginning, assuming relatively little money is invested. It takes time to learn about an area or property type or to build a team on the ground. It is hard from afar.



"close" is defined as in "you can drive there, look at 3 or 4 properties for an hour each, meet with people like a property manager or appraiser, and drive back, all in a day", perhaps 1x or 2x/month !



Once you invest several hundred thousand or more the cost of flying there is small compared to the revenues.

 

[ChrisDavies]

I grew up in Edmonton to a family who have been buying property here for 4 generations and owned a property management company for 25+ years. That said, I just moved back here after 3 years in Kelowna and a stint in Ireland and I think Edmonton's a great place to live and raise a family.



As for actually living in an investment area, when we moved back we decided to keep things small and bought a nice 3 bedroom townhouse in North Edmonton. Not 6 months after that I picked up another unit in the same complex, did a reno and flipped it. There's something nice about it only being a 30 second walk to let a contractor in!

 

[invst4profit]

I personally only buy within my area. I must be able to get to it in less than an hour and know/trust those that I hire in situations where I can not do the work myself. I know from first hand experience that having a close trusting relationship with contractors generally produces higher quality results at a lower cost especially when cash is involved.

I do not trust a single person in this world to take as good care of my investments, tenants or the spending of my money as I do myself and frankly find it more reassuring and easier to manage my properties than having to trust in or manage a property management company.

Having said that I will admit I could, at this stage in my life, probably be able to turn over the responsibilities to a property management company but only because I am as experienced as I am at managing and doing all aspects of maintenance myself.

The greatest concern I have being in Ontario is the RTA and LTB. I can still not bring myself to a level of trust regarding the managing of tenants by a property management company.

The reality is if you wish to grow you will need to let go, delegate responsibilities, and at that point in time I do not think it matters where you invest. I, by choice, have chosen not to grow to that point.



On the other hand I would not advise new investors to invest in Ontario due to the existing government regulations and the extremely pro tenant LTB so I guess I am conflicted from the point of those investors living in Ontario. In Ontario one bad tenant has the capacity to wipe out your investment.



I believe the question one must ask themselves when starting out is, am I a landlord or a investor?

If you intent to be only a investor who cares where you buy, but if you are starting out with the intent of being a landlord, at least initially, you had better be close to your investment.

 

[housingrental]

Greg has a good post above

I'd personally hire a PM company if I was investing out of area, but spend time to ensure oversight so that if things didn't go smoothly I could step in before any costly issues happen.

One thing to highlight though - stay out of Ontario - for now....the future might look brighter