Should I invest near home or long distance? That is the question every investor grapples with.
If your sole consideration is the need or desire to self-manage your investment property. Ask yourself the following questions.
Are you available, and willing, to manage your property on a full-time basis? In other words, can you take on property management as your full-time job?
Are you up-to-date on local landlord laws?
Are you able to manage contractors and ensure that they are doing high-level work?
Are you able to run your tenants credit and perform background checks?
Do you honestly believe that you are the most qualified person to manage your property?
Introducing the principle of substitution. The principle of substitution states that the upper limit of value tends to be set by the cost of acquiring an equally desirable substitute, assuming no untimely delays. A savvy investor will pay more for an income-producing property than it would cost them to build or purchase a similar property. Likewise, a prudent tenant would not pay more rent than they would pay to rent an equally desirable property.
All properties, regardless of location or price, are substitutable, if the purchase price is the same as an investor you need to look at the income stream. The principle of substitution is closely related to the economic concept of opportunity cost, which holds that the true cost of an economic choice is measured by the opportunity foregone because of the choice.