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Successful Real Estate Investors Are Geographically Agnostic
By David Campbell On 03/27/2011 · 2 Comments · In Dallas Texas Market Info, Investment Opportunities, Newsletter
If you have limited your investment real estate search to the properties you can drive to within a few hours of your mid-sized American city, you have limited your search to just 0.0005% of all of the potential real estate investments in the world. (0.0005% is about one drip in a hot tub). Sadly, many people radically and artificially restrict their real estate investment search because of old fashioned thinking. People telecommute to their jobs through cell phones and the internet, and they telecommute to their social engagements through Facebook and Skype, but they are unwilling to telecommute with their investments.
As one of my mentors frequently says, “Live where you want to live and invest where the numbers make sense.” Many of my clients have adopted this investment philosophy and they are doing well because they can get in and out of markets and properties as the numbers and local economies change.
Your investments must be Geographically Agnostic (meaning a willingness to invest in any location where the numbers make sense).
Many of you know, I live in Northern California, but I run a development company in Dallas, Texas. I’m willing to get on a plane to go to work because my family likes living in California, but the deals and the profits live in Texas. I have owned property in four countries and four states because I live where I want to live, but I continually invest where the numbers make sense. If you aren’t willing to let your dollars get on a plane to chase profits, you will not be a profitable investor for very long. Markets will continue to change, economies will change, investment strategies will change, laws will change, and your life will continue to change.
What if you select an investment market because it is near your home and then you have to move? I showed one of my clients some amazing investment opportunities in Dallas but he was unwilling to consider them because they were more than 20 minutes from his home. The investor bought investment properties near his home even though the numbers were not very strong. Ironically, this investor works for a company that recently closed its doors in his home town and is moving his job to Texas. The investor gets to make the choice of moving his family to Texas or remaining unemployed near his rental property. Willingness and ability to move for work is a huge asset in this new economy. Willingness and ability to move your capital to pockets of opportunity, regardless of the opportunities’ geographic proximity to your home, is also a huge asset.
If you spend a lifetime investing in one market with the same strategy, you will eventually get burned. Real estate is not a one size fits all strategy. While real estate is generally illiquid, the owner of the property must be fluid. You must be willing to get into and out of properties and markets as conditions evolve. You must continually adapt your investment strategy to market conditions and your need for personal gain. If you are limiting your potential real estate investments to where you live, your investment strategy may or may not work in your local market, or the timing might not be ideal to enter or exit, or your strategy worked in your local market five years ago but doesn’t work today. If you are willing to expand your search criteria from just your local market (0.0005% of all real estate in the world) to include all of the United States (4% of all properties in the world), you have increased your options and probability of success by over 8,000%. Who doesn’t want their investments to have an 8,000% increased probability of success?
I have been focused on the Dallas market for the past three years because Dallas is rapidly preparing for a housing shortage. The Dallas-Fort Worth ( DFW) area grows by one person every 62 seconds. Is DFW is adding a new home every 3 minutes? The answer is NO. Developers cannot get the financing to build houses fast enough to keep up with demand. There is no more available land within close proximity to job centers. The land in Texas that is available to developers is at least thirty minute from where the jobs are and the land requires massive injections of capital to develop infrastructure. The capital for this infrastructure isn’t available. The result is a looming housing shortage. If you get into the Dallas market before the housing shortage is reflected in home prices, you will be a winner. Once the housing prices rise faster than rents, I will move my focus to the next market where the rent to purchase ratios make sense. Once home prices in Dallas increase and interest rates rise, Dallas will be in a holding pattern for investors and we will need to focus on another market for our new acquisitions.
Want to know how to take advantage of real estate opportunities in Dallas? I promise you won’t find investment opportunities like this anywhere else. We are real estate developers who think like investors. We are creating new inventory specifically designed to make you money.
Send an email to consultation@Hasslefreecashflowinvesting.com to set up a free investment strategy consultation, and we will let you in on the biggest real estate investing secrets of the decade.
Real Estate Investor / Developer / Author / Founder of Hassle-free Cashflow Investing
Find me on Skype: HassleFreeInvesting
Part of our series of articles on investing in Dallas
Just read this article, as a DFW resident I like what you have to say about Dallas. You mentioned you have invested in real estate in other countries. I eventually see myself helping baby boomers relocate to other countries like in Central America where health care is cheaper and there pensions can stretch further. With so many of them having money locked in their homes I see plenty of real estate deals in the coming years both here and abroad.
I am curious to hear your thoughts about investing abroad? Especially with this business objective in mind. Thank you! Ed
Ed – There are a lot of complexities about investing abroad, but if you are willing to master those complexities I am all for it. As a part of my personal investment philosophy I’ve made a decision to focus on the US real estate market because of simplicity. It is easier for me to do deals in the US because I already have a core base of knowledge that helps me navigate the acquisition, legal, tax, and property management sides of property ownership. Within the US market I am more geographically agnostic because the “rules of engagement” are mostly the same regardless of which state you are investing in. Each state may have differences in property management and foreclosure laws, but if you are working with a local professional they can help you navigate those nuances. If you have (or are willing to acquire) that base of knowledge outside of the US then go wherever the risk (and hassle) adjusted return make the most sense for you. Fortunately for you, you live in one of the best places in America to invest. Forbes names the Dallas – Fort Worth real estate market as the #1 best place for residential real estate investors to buy in 2014. To your success!! – David Campbell