Where or where is the best place to purchase a rental
property? A reader recently asked me
where am I going to purchase my first rental and I am going to answer with more
than one option. My philosophy starts
with some wisdom from Warren Buffett who says "Never
invest in a business you can’t understand." Instead of business, I would insert city or
area of the country. For example, I have
no idea about the east coast. I have no
family or friends there that I have visited and the culture there is very different from my own. So I will not invest in the east coast for my
first property. Places I do know: the Midwest, the South and California.
Now that gives me a lot of
options. I like to then narrow my buying
options to travel access, family and market.
I have to travel quite a bit to see family every year so if I am already
making these trips, why not mix a little business in there as well. That means California, Wisconsin, Colorado,
Florida and Nebraska are the top of my list.
When it comes to accessibility by plane or train that leaves me with California,
Wisconsin and Florida. I then narrow it by
market.
When I say market I mean
factors including property taxes, rental prices, demand and purchase
price. California is where I live so if
I can find a multifamily home that gives me a place to live and make some
rental income that is the number one option!
But California has an incredibly high purchase price for a mobile home,
let alone a multifamily home.
Madison, WI is a college
town and has the benefit of always needing rentals in a large portion of the
city. A downside is the high property
tax. Florida, specifically Fort
Lauderdale and Miami are beneficial because of the high number of immigrants
and a popular travel destination. Also
Florida’s home prices are currently lower which benefits me as a buyer, not as
an owner. Currently I am focusing on my
future research on these three locations! Stay tuned for updates on those
markets and thank you for the questions.
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