Is out-of-state landlord a lot of hazzle?

10 Replies

we live in SoCal. and we are really interested in purchasing a rental duplex or 4plex in other state( now we are thinking about SC) we have a broker and family members there can take care of it if it's not complicated problem.

However, a friend told me being an out-of-state landlord is a lot of hassle, like I might need to going there a lot for some emergency. Even purchasing a property that's a little far form where we live is not wise. so It's just not a good idea to be a out-of-state landlord. Is that true? Thank you.

Hi Steven,

You've hit the jackpot for information on out of state rentals.  BP is loaded with everything you'll need to know!  As a disclaimer, I do not have any personal experience with out of state investments (yet).  But I do have a few quick tips...

When people buy out of state they usually will have a trusted & knowledgable agent that will help them locate the ideal property.  It is important to have someone that is familiar with real estate investing, the specific markets within the city, & investment rentals.

The most common investment strategy for purchasing a rental property out of state is to pay a property management company to take care of your rental.  There are many criteria to look for when searching for a PM company, not all of which are monetary based.

Use the search bar and look for "out of state investing" -  Make sure to check out related "bigger pockets blogs"  when you get the search results as well as "forums".

From my perspective it is not a hassle at all.  I have 12 years experience with several rental properties of different types and quality .  I have had great tenants because I hired a professional property management company.  Not an agent and certainly not a relative with no experience at choosing a tenant.  If you believe your family can do the job do not buy out of state. It  WILL be a MAJOR hassle.  They may be family but when they pick a loser who are you going to blame.  When they get calls from the tenant with a problem in the middle of th night who are the relatives going to blame, you.  

Property management was the ideal way for me to own out of state  I interviewed several property management companies before making a decision.  I have not purchased properties in other areas simply because I couldn't find a professional (not an agent but a full time knowledgeable PM) to manage the new property.

Even when I moved briefly to the area where the rentals are located I didn't manage them myself.  Why would I subject myself to calls from people with issues and problems?  So I could go out in the middle of the night to fish a potato the tenants kid threw in and clogged the toilet?  I have the knowledge and skill to do any of the repairs but the few dollars saved is certainly not worth it to me.  If the cost (8%) of collected rents is gong to kill the deal for you it isn't much of a deal anyway.  If you have trust issues do not buy out of state.  You won't be happy.  Again if you even consider having a relative manage for you are not out of state investment ready.

Thank you, Jared and Martin. Very good point. A good and trustworthy teammate at that location is very crucial. That's very encouraging.

I know a lot of people invest out of state, but I would never do it again.  Actually for me, I actually moved to another state from where my house was.  It was the house I lived in, and I moved across the country for a job and hired a management company.  

They were not honest and ripped me off charging me for this and that constantly.  This house was completely updated - electrical, plumbing, new everything.  So, it didn't make sense.  But, the property was in WA and I was in TN.  It would have been impossible for me to fly back to see what was really going on.  I just ended up selling it.  

So, for me, unless I had personal experience with a manager I knew and could trust, I'd never have a rental far away from me again.

I self management my out of state properties.  I have a handyman that do repairs on my properties.  I do not think it is necessary to pay a pm to do nothing sometimes for  months at a time.  According to where you invest, I am pretty sure some BP members can recommend good tradesmen to do repairs on your property at a reason rate.  You also can use Angie's List, Red Beacon, Craigslist, YP.com, Google, and Yahoo to get home repairs done.

Thanks @Joe Moore

 and @Martin Scherer , very encouraging. Also thanks to @Sue K. too. I guess there can be good and bad experiences about out-of-state investment. But I do realize the starting level for some states are much lower than Socal, which is very important for newbies like me. It sounds like a good way to get my feet wet and experience how the real world works. 

Steven I do not focus on residential but I do get phone calls multiple times a month from investors with nightmare stories.

It's not impossible to own out of state. One key would be the quality of the asset. For example there is a huge difference managing a 50k dumper property from afar in an average to questionable area versus a high end property in a nice area.

The quality of tenant, chance for appreciation, and rent growth tends to be better in a high end area. It's more expensive. If you buy multiple little house in varying states you diversify. You are also having to keep up with various property managers all over creation and landlord friendly versus tenant friendly states. People tend to buy cheap properties because it is all they have the money for to start.     

Originally posted by @Steven Zhou :

Thanks @Joe Moore

 and @Martin Scherer , very encouraging. Also thanks to @Sue Kellytoo. I guess there can be good and bad experiences about out-of-state investment. But I do realize the starting level for some states are much lower than Socal, which is very important for newbies like me. It sounds like a good way to get my feet wet and experience how the real world works. 

 Why don't you look within CA?  There are affordable areas in CA.  Look at Shasta County, for instance.  There's an investor here who has property in Shasta County, and I'm ready to go to bed and am forgetting her name... but, there are very affordable areas right here in CA, and if you're planning on buying and holding, remember that the property taxes in CA barely increase as long as you own the property, no matter how much the value goes up.  That's worth a lot, IMO.  And getting to northern CA would probably be easier than getting to another state, unless it's AZ, but I think their property taxes are not capped like here in CA.  Anyway, check out the property listings all over CA and see if you aren't surprised.

Thanks @Sue K. it's a good way of thinking. I will definitely check north ca. 

@Steven Zhou

The most important factor is your property management company. There are some good ones on here...... I have not noticed any for SC though. Reputation is everything on BP so here is a great place to look and I would be glad to tell you about the ones I know and have worked with. Just make sure you get many references and read reviews on whomever you choose to work with! 

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