How do you decide whether to venture out and invest in another state or whether you should stay local? Well, each strategy has its ups and downs.
If you're investing locally, you can work the relationships that you build locally because it's easier to have a cup of coffee or lunch as you get to know those in your network. Depending on how much of the work you plan to do yourself, you'll be nearby and able to oversee the work of contractors and vendors. You may even find it possible to manage a smaller property on your own when you're just starting out.
The main downside to investing locally, however, is that you're limited to just the commercial properties in your area. What if you can't find a good deal close by? What if properties are too expensive? And why would you want to limit yourself to just investing locally when you can pick from any of the thousands of commercial properties available across the entire United States? Another disadvantage to investing locally is that you're likely to be tempted to stop by, give your advice, and stick your nose into situations that should have been outsourced to a property management company (check out Chapter 11 for more on property management).
Many of our Commercial Mentoring students struggle with this disadvantage at first. They want to find that perfect commercial property right down the street so they can drive by and monitor it. Of course, unless there's a tornado, real estate — whether it's in Kansas City, Chicago, or San Francisco — isn't going anywhere.
To get through this struggle, we encourage our students to focus on buying properties that are so big that, even if they did want to manage them themselves, they couldn't. With a big property, you need a team of people to help you manage. Ideally, you'll have a quality management team in place. This may be a different way of looking at things, but if you're going for the big life, why not go about it with gusto.
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Discover the Jealously Guarded Insights of Real Estate Tycoons and Hot Dealers! Back in the days of the wild, Wild West, when easterners traveled across this vast country looking for opportunity in the newly opened territories, they were often referred to as a ‘tenderfoot’.