You have probably heard the old adage: “There are three things that matter in an investment property: location, location, location”. I can’t tell you how important this is for a healthy and manageable investment portfolio.

In this post, we are going to take a look at how location affects residential real estate investing.

You want to be buying houses in a very specific area, especially when you are buying, fixing and renting. As a hard money lender, I talk to real estate investors every day that are relatively new to the industry and are looking for a rental property loan. Sometimes they tell me about a house they are looking at in Orlando, or another one that they have in Tampa, and another one in Jacksonville… If this sounds like you, it’s time to re-evaluate your strategy. Here’s why…

The first rule about renting investment properties and building a nice portfolio is to look for houses in the same location. In my view, if you can’t stand in the center of where the houses are and, figuratively speaking, throw a rock and hit every house, you have the wrong plan. A rental house in Orlando, another one in Tampa, and another one in Jacksonville is a recipe for disaster.

Why should you buy rental houses in the same location?

There are 2 reasons to buy rental houses within close proximity:

• To know what you are buying – Buying properties within the same neighbourhood will help you understand the challenges and advantages of a specific investment property (appreciation, crime rate, etc).
• To create synergy between the properties – Houses within the same area are usually of the same kind. This can be beneficial in many cases. For example, you can hire a local handyman and he will know exactly how to fix maintenance issues in that kind of house. This is much more efficient than sending a handyman to a house in Orlando that was built in 1963 and another handyman to a house that was built in 2001 in Tampa, or Jacksonville.