More than ever, if you’re not satisfied with the investing opportunities in any given market, you can simply go somewhere else. Ever improving technology and property management have been instrumental in this. Much like traditional Wall street investments, it’s important to mitigate risk by spreading out across other markets. Marco Santarelli of Norada Real Estate Investments tells us more in this FlipNerd.com Flip Tip.
Mike: Hey it’s Mike Hambright from flipnerd.com and we have a quick V.I.P. tip to share with you from Marcos Santarelli, the founder of Norada Real Estate investments who’s going to share one of his top 10 rules for successful real estate investing, it’s actually rule number 5, which is to be market agnostic.
Marcos: Yeah, thanks Mike, I think this is a really important point and one of my rules and it is to be market agnostic. A lot of investors still believe to this day that they should invest in their backyard that they have to invest within a 30 miles or 30 minutes radius of their home because that’s where they can go and drive by the property and look out their window of their car and make sure it’s still there. Regardless of where you buy your property, whether it’s 3000 miles away or not, the property is still going to be there if you have a property management companies managing it, so nothing is going to happen to your property, it doesn’t change anything just being able to invest in the property in your backyard, but the United States is a very large country. It’s made up of over 400 metropolitan statistical areas, so every one of those markets is a local real estate market, it has its own economy, its own fundamentals, its own housing market, its own supply and demand drivers, so each market will move up and down independently of one another due to many local factors.
And because of that, you should recognize that there are times where it makes sense to invest in your local backyard, your market, and there are times, more often than not, where it makes sense to invest in a different market, another market, because the opportunities are better there. The rent to value ratios are better, you can get higher rates of return, higher cash on cash returns, maybe there is more appreciation potential there. So you should only invest in markets that make sense to do so, not because you live there or because you bought property there before, so I guess the bottom line is there’s an element of timing with every single market and you don’t want to buck the trend, so expand you mind, look at the different markets, consider, you know, what makes sense. We can help you with that, if you want, you know we have lots of free information on our website, so be market agnostic.
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Mike: Please note the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.