INVESTORS’ CORNER: Avoid the Grass is Greener Syndrome

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“When it comes to investment, absence doesn’t make the heart grow fonder.  Somehow, we are prone to think the grass is greener in the other fellow’s yard … The net result of this is that, while the grass may indeed be greener, it could be a lot more expensive.  The properties we acquire in remote locales must be able to produce as much as 50% more cash flow than properties in our own area just to pay for all the inefficiency and costs that accompany remote  property investment.”             

-Jack Miller,  Success Secrets

Finding a location to invest in can be difficult, especially if you live near a big, expensive metropolitan area.  While some locations do have better investment fundamentals than others, I concur with Jack that if at all possible you should stay in your own backyard to invest.

First of all, you’ve probably chosen to live in your area for a reason – you like the schools, the amenities, the landscape, the people.  Stick with what you know and understand (see the idea above about understanding your investments).

Secondly, it’s just more convenient when it’s close by.  A town 2 hours away may be wonderful for investments, but how wonderful is it to you if you can’t execute your investment plan? You need to get out in the field, get to know people, and get to know neighborhoods.  This market knowledge is crucial, but you lose the intuitive advantage of a local if you invest out of your area.

Thirdly, hiring third-party managers and service providers is much more difficult and expensive out-of-town.  You’re more likely to find well recommended property managers, landscapers, plumbers, etc in your own town.

A famous speech was made over 100 years ago called “Acres of Diamonds”.  In it the orator noted that failure to seek out opportunity in your own locale may indeed be merely an excuse not to try rather than a fact of life.  Look for your own “grass is greener” excuses, and ask this excuse-buster question:

Has anyone in my area faced similar circumstances and been successful at what I’m trying to do?”

If the answer is even a remote yes, go out and challenge your assumptions.   Change your question from “Why can’t I?” to “How can I?” Study intensely how other investors in your area make money.

You can always choose to invest somewhere else later. First make sure there are not diamonds in your own backyard!

Chad Carson is a member of Metrolina REIA (metrolinareia.org), which provides education, networking, and networking for real estate investing in the Charlotte region.  Chad also writes a newsletter about real estate, money, and life at coachcarson.com