Real Estate Investing Basics

Is Investing in Real Estate in Other States a Good Idea?

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301 Articles Written
A question that has been coming up a lot lately is, “Should I Invest in real estate in other states?” This is actually a great idea for those people that are living in overpriced markets where cash-flow is virtually non-existent, but there is a price you’ll pay for going out of state. Investing in properties [...] View the full article: Is Investing in Real Estate in Other States a Good Idea? on The BiggerPockets Blog. This content is Copyright © 2017 BiggerPockets, Inc. All Rights Reserved.

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Joshua Dorkin is a serial entrepreneur, investor, podcaster, publisher, educator, and co-author of How to Invest in Real Estate. He started BiggerPockets to help democratize the real estate investing landscape for himself and others, aiming to make it accessible for everyone, regardless of income or education. Today, BiggerPockets is the premier real estate investing website online with over one million members and reaching over 70 million people with the message of financial freedom through real estate investing. Joshua, along with his wife and three daughters, make their home in Denver, Colorado, and spend any time they can traveling, exploring, and adventuring. Read more about Joshua’s story in 5280 and Inc.com.

    Real Estate Attorney
    Replied almost 12 years ago
    Every state has different laws regarding real estate. It is important to contact a local real estate attorney in the area of prospective purchase and have a discussion of the differences in basic real estate law, taxes, typical property rights and problems, and tenant/debtor rights. Absentee landlords are often slow to respond to issues, so employing competent management is important.
    narnia3
    Replied almost 12 years ago
    I’m listening to an audio book right now discussing this very idea in one of its chapters. I agree with you and so does that book that it can be profitable, but doesn’t make a lot of sense. Seems best to invest in an area that you know very, very well – like your own backyard.
    gsawiris
    Replied almost 12 years ago
    In fact, most people aren’t willing to take the risk that real-estate investing entails; fortunately, these are the same people that will make you rich by renting from you. The little secret is that there are hundreds of individuals who procrastinate for every one individual who has a vision and chooses to take the risk.
    john
    Replied almost 12 years ago
    I think you have to find a good management company if you’re going to buy property out of state, or, as you said, have friends or family in the area who can check up on the property and the management company from time to time. The key is knowing the area you’re buying in. A lot of people put themselves in tough situations that got into the real estate bubble late in the game from buying out of state, in places like Las Vegas, and then with risky loans that were based on property values increasing. There are companies, like Trada.com, that enable investors to buy property out of state and handle all of the management concerns for the property. They do research and build in locations where long term growth is good – states like Idaho, Arizona, Texas, Washington…
    john
    Replied almost 12 years ago
    I think you have to find a good management company if you’re going to buy property out of state, or, as you said, have friends or family in the area who can check up on the property and the management company from time to time. The key is knowing the area you’re buying in. A lot of people put themselves in tough situations that got into the real estate bubble late in the game from buying out of state, in places like Las Vegas, and then with risky loans that were based on property values increasing. There are companies, like Trada.com, that enable investors to buy property out of state and handle all of the management concerns for the property. They do research and build in locations where long term growth is good – states like Idaho, Arizona, Texas, Washington…
    james
    Replied almost 12 years ago
    I am an investor that lives in California and Italy. I have found Texas to be a great place for single family investments. I have bought a few properties through Blake Venture Corp. They specialize in selling investment properties. I think it is great to invest in different markets but it is important to have a good management company. I also owned some rental property in Arizona but ended up losing money because the property manager was terrible. My house sat vacant for 4 months. As soon as I switched companies, the house was leased in 2 weeks.
    james
    Replied almost 12 years ago
    I am an investor that lives in California and Italy. I have found Texas to be a great place for single family investments. I have bought a few properties through Blake Venture Corp. They specialize in selling investment properties. I think it is great to invest in different markets but it is important to have a good management company. I also owned some rental property in Arizona but ended up losing money because the property manager was terrible. My house sat vacant for 4 months. As soon as I switched companies, the house was leased in 2 weeks.
    technogeek
    Replied almost 12 years ago
    Seems like the management is key. Not being able to personally oversee the details gives me a bit of a fright. I like to be sure everything is working well. What techniques or successes have you had in hiring good management?
    Joshua Dorkin
    Replied almost 12 years ago
    Thanks everyone for your comments! Technogeek – We’ve written a few articles that address your questions. Take a look at our article directory and you’ll find them under the heading Landlord & Property Management Articles.
    Jerad Kaliher
    Replied almost 12 years ago
    I think this really comes down to a question of how large your portfolio is and what type of management team you have in place. For someone with a few properties it might be disastrous to have a few spots that are further then driving distance. It might just be a matter of practicality and common sense. I guess it just ain’t that common though, is it?
    Mike Taylor
    Replied almost 12 years ago
    I agree 100%, it all about getting a great management team that will make sure you have good tenants that not pay but keep the property up as well. I think if you buying out of state you really to be in it for the long haul.
    Robert Feol
    Replied almost 12 years ago
    This is such an interesting topic. I agree that the most sensible technique is to stay in your ‘backyard’; however, when your backyard is overpriced such that getting into an investment carries with it incredible risk with marginal upside, it may be time to look at out of state investments. My business partner and I live in Memphis, Tennessee – considered one of the top places to invest in the US today. I will tell you, we sold almost 30 investment properties last month, almost exclusively to out of state clients. Now these people are having success with these investments, but it is because we have a team in place that allows them to sleep at night and sets them up for success. This is ESPECIALLLY important with property management!!! I guess the point is, profitability does exist in out of state investment homes; you need the support infrastructure to make it work, and DO YOUR HOMEWORK!