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Depth or Breadth? Deciding Whether to Expand to a New Market

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At the time of writing this post, I find myself with a hunger for another property and a bank account that might even be able to satisfy that hunger. My routine this year, since starting my short-term rental journey, has been somewhat of a copy-paste technique within the same city. I have two houses in the same small town and, with it, a rhythm and pocket of comfort. I understand the market and have resources in place that make replicating my investments a relatively easy thing to do. So, when I started fantasizing about the idea of investing in a whole different state, I became torn in two directions. Do I keep going with the area I understand or venture out into the unknown and try my hand at an interstate venture? I hope this post serves both as an informative article for you in your own STR investment career and as a way for me to think-out-loud through the decision, looking at the pros and cons of each path. Let’s get started.

The Niche I Know

The adorable, small town I chose for my first two investment properties has served me well. I have enjoyed getting to know the area and building a trustworthy team of resources around me to help run the show. Here’s a pros-and-cons list of adding my third home to this market:

Pros

Cons

Venturing Into The Unknown

The new city/state that caught my attention isn’t completely foreign to me. My brother lives in town, which is what gave me the idea to consider it. Here’s what I like and dislike about investing here:

Pros

Cons

So, What To Do?

Obviously, some of these items pulling me toward either market are specific to the areas in question. The home values, property taxes, big-city party potential, and revenue expectations in the two markets are all things that are relevant particulars in my scenario, but may vary in your own decision-making process. Nevertheless, it is important to take these things into consideration. Other features in my lists are universal pros and cons to venturing into any new market.

Ultimately, I could justify going either direction. Based on my own vision for my business, I have decided to move into the new market for my next investment. I want to challenge myself with the experience of hosting a short-term rental home in a new city and in a new state. The revenue increase and new vacation location for myself will be worth the uncertainties of the market, extra setup work, and occasional long drive. The pros outweigh the cons for me, though they may not have for you while reading. That’s okay – We are all crafting our own journey here. If you feel I missed any key considerations for either avenue, please leave a comment!

As always, thank you for reading and happy hosting.

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