For example, the average 1,500 square foot, 3-bedroom, 2-bathroom home in Cupertino, CA built in 1960 can sell for close to $2 million<\/a>. On the other hand, a nearly 3,000 square foot, 4-bedroom home in Yelm, WA built in 2012 can sell for a mere $330,000.<\/p>\n When you can purchase an entire house out of state for what would only be the down payment in your neighborhood, that\u2019s motivation to consider buying out of state.<\/p>\n But like any investment, there are potential risks that must be weighed before making the commitment.<\/p>\n Related:<\/strong> Why It\u2019s About to Become a LOT Easier to Invest From Afar in the Next 5-10 Years<\/a><\/em><\/p>\n Here are 6 factors you\u2019ll want to consider before committing to buying any out-of-state property.<\/p>\n When you\u2019re from out of state, you\u2019re more likely to be considered a high-risk borrower. This can lead to higher homeowner’s insurance rates, down payments, and even mortgage interest rates.<\/p>\n Owning rental property out of state can also create a complicated tax situation for you since you\u2019ll be earning income in multiple states. Be prepared to hire a tax professional to handle your taxes in this case.<\/p>\n You\u2019ll also want to visit your property in person on occasion. This means adding the cost of travel and accommodation to your list of expenses. Like with any expense, there are ways you can get special deals, like searching for flights on a Tuesday<\/a> or departing on a Wednesday.<\/p>\n Being out of state makes it difficult for you to just pop over and check on your property. It also makes it extremely difficult to handle tenant problems and repairs\u00a0or even to collect rent.<\/p>\n Before you purchase out-of-state property, do some research and find out if there\u2019s a local property management company with a great reputation that can handle the technical aspects of your property for you. Most property management companies will even screen potential tenants for you as part of their services.<\/p>\n A high foreclosure rate in the area is a sign of trouble. Before making any decisions to purchase an out-of-state property, you\u2019ll want to find an area with a strong economy.<\/p>\n The factors that affect ROI have the potential to give you an advantage in some states. The homes may be cheaper to purchase, the appreciation rates may be greater<\/a>, mortgages might be lower, and rental market conditions could be more favorable in another state.<\/p>\n Although you may see factors up front that can increase your ROI, there are other factors to consider that may end up decreasing your ROI on the back end\u2014taxes, extra fees from lenders for being from out of state, and even property management fees. Or, if your property is in an area that doesn\u2019t have a good market, you may have a hard time collecting the rent you need to cover the mortgage and make a profit.<\/p>\n6 Questions to Ask Before Committing to an Out-of-State Rental Property<\/h2>\n
1. Are your expenses going to be higher than usual?<\/h3>\n
![\"\"](\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/02\/organizedocs.jpg\" "\\"\\"")
<\/p>\n2. Is there a local, reputable property management company?<\/h3>\n
3. What is the foreclosure rate of the area?<\/h3>\n
4. Is the ROI worth it?<\/h3>\n
![\"free-mentor\"](\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/01\/free-mentor.jpg\" "\\"\\"")