{"id":103137,"date":"2018-10-21T05:00:34","date_gmt":"2018-10-21T11:00:34","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=103137"},"modified":"2021-03-16T14:50:53","modified_gmt":"2021-03-16T20:50:53","slug":"dont-invest-real-estate-out-of-state","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/dont-invest-real-estate-out-of-state","title":{"rendered":"The Top 3 Reasons You Should Never Invest in Real Estate Out of State"},"content":{"rendered":"<p class=\"p1\"><span class=\"s1\">I can already feel the heat from a lot of you prospective out-of-town investors and existing out-of-state investors, but nonetheless, I still want to talk to you about why you should <em>not<\/em> invest in real estate out-of-state.<\/span><\/p>\n<h2>It&#8217;s Significantly Harder to Find a Good Team From Afar<\/h2>\n<p class=\"p1\"><span class=\"s1\">The first reason is this: The likelihood of you finding the right people to help you succeed in your out-of-state endeavors is next to none. You&#8217;ll need to have\u00a0a trusted real estate agent, a good property manager (good luck with that one), and a good contractor (again, good luck with that one). You\u2019re probably going to have to have a good attorney, accountant, title company, maintenance personnel, and eviction attorney. All of these people are going to be influential to your success.<\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">Another thing that I want to mention is when things turn south, it\u2019s a very long drive to go and try to fix those issues. What tends to happen is when the cat leaves, the mice come out to play. The problem in this situation is the cat is never around, so the mice are always playing. I honestly think you are going to run the risk of being overcharged for absolutely any and everything that you could imagine\u2014for construction costs, property management, and even various attorney&#8217;s fees. I think the people factor is very important when it comes to successfully investing in real estate, and I think that finding the right people out-of-state is going to be hard to do.<\/span><\/p>\n<p><iframe loading=\"lazy\" src=\"https:\/\/www.youtube.com\/embed\/KjixHPZlezw\" width=\"560\" height=\"315\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><br \/>\n<em><br \/>\n<strong>Related:<\/strong> <a href=\"\/renewsblog\/technology-assist-long-distance-real-estate-investing\/\" target=\"_blank\">How Technology Makes Long-Distance Real Estate Investing a Breeze<\/a><\/em><\/p>\n<h2>You Probably Won&#8217;t Get the Best Deal<\/h2>\n<p class=\"p1\"><span class=\"s1\">The second thing is you will not get the best deal. Everyone I talk to says they are awesome at conducting due diligence online, looking at all the stats and demographics and all of that mumbo jumbo. Do you really think that you\u2019re going to find a better deal for a better price than someone like me who is in the office 14 hours a day, who has done over 500 deals? I know everyone in town, I\u2019m a cash buyer, and I know every rock to look under. The likelihood of anyone out-of-state or country finding a better deal than me is once again next to none. <\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">So when you are investing out-of-state, you have to understand that you\u2019re probably going to be paying more than you should for the property, and hopefully you\u2019re not going to be paying more than market value if you\u2019re investing through a turnkey company. But like I said, I just don\u2019t think that you are going to get the best deal, and that\u2019s something that you have to add into your calculations when looking to buy the property. Another thing is you\u2019re going to get nickel-and-dimed with miscellaneous costs because again, the cat is not in town. So you also have to take that into consideration when calculating your return on investment. You have to remember to underestimate your income and overestimate your expenses.<\/span><\/p>\n<p class=\"p1\"><em> <strong>Related:<\/strong> <a href=\"\/renewsblog\/virtual-reality-globalization-real-estate-the-world-is-about-to-shrink\/\" target=\"_blank\">Why It\u2019s About to Become a LOT Easier to Invest From Afar in the Next 5-10 Years<\/a><\/em><\/p>\n<h2>Navigating State Laws is Complex<\/h2>\n<p class=\"p1\"><span class=\"s1\">That leads me to the third and final reason why you should not invest out-of-state, and that is the complexity that comes with it. I\u2019m talking about the complexity that comes with setting up the right legal structure. Every state has different laws, from an eviction standpoint and setting up an LLC to lawsuits, all of which an attorney is nickel-and-diming you for. And then there&#8217;s also the tax liability of investing out-of-state. Once again, I\u2019m not an accountant, but federal, state, and city taxes are all different depending on your income and the other investments that you have. You don\u2019t know what tax bracket you are going to fall into or what your tax liability is going to be when you are investing in that particular state.<\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">Those are the three reasons why you should never invest out-of-state. If you think I\u2019m wrong, please comment below. Of course, there is nothing necessarily wrong with any piece of real estate as long as the price is right\u2014and that could be out-of-state or out of the country; I just think it&#8217;s more likely to be in your own backyard. Thanks for listening.<\/span><\/p>\n<p><a href=\"https:\/\/www.biggerpockets.com\/webinars?utm_source=newsletter\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-91217\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/08\/blog_ads-01.jpg\" alt=\"\" width=\"700\" height=\"85\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/08\/blog_ads-01.jpg 700w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/08\/blog_ads-01-300x36.jpg 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\" \/><\/a><\/p>\n<p><em>Do you agree? Disagree?<\/em><\/p>\n<p><strong>Comment below!<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>I can already feel the heat from a lot of you prospective out-of-town investors and existing out-of-state investors, but nonetheless, I still want to talk to you about why you should not invest in real estate out-of-state.<\/p>\n","protected":false},"author":1672,"featured_media":86901,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5183],"tags":[],"class_list":["post-103137","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-landlording"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/103137","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/1672"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=103137"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/103137\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/86901"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=103137"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=103137"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=103137"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}