In-State vs Out-of State Investing

10 Replies


To be brief, I am a first time investor looking to invest a maximum of ~40k on a property. (25% down 4-5% interest is probably my best financing option, currently getting pre approved right now).

I want to invest local (Massachusetts Metrowest region) however with my budget and financing I would be lucky to find a 1 bd 1 ba condo due to the inventory shortage we see nationwide. In the possible deals I’ve analyzed I’m looking at I can probably get away with cash flowing ~150 a month which I can live with since I intend on holding this property for a very long time which is why I don’t seem keen on waiting for a market correction. (Open to hearing why I should reconsider)

But I was thinking, 40k can probably get me much farther in another state. So my question becomes this:

If you had 40k for a down payment would you choose to stick local for your first property or would you consider out of state, and why?

Thank you!

@Hossam Elaskalani

If it will be your primary residence you won’t have to bring as much to the table to close the deal. Owner occupied multifamily is the way to go. I say stay in the New England area but that is just my opinion. Lay out a side by side comparison what you would have to have in place for an out of state deal ver a local deal.

I looked into out of state investing, but bought my first property in Ma. I know Ma has some very hard tenant landlord policies and can be expensive. I looked in Memphis and other areas where it is more landlord friendly and the prices are cheaper. The reason I stayed in state boil down to 2 reasons. 1 is that this is my first investment so I want to see it and know it before going forward. I know this will change in the future but it made me much more comfortable. I can also self manage to save some money while I have a small amount of doors. The second is I had a hard time finding BRRR protentional farther away. I don't know the market so it was hard to figure out what actual repair costs are. I do want to find a team elsewhere when it opens up to begin BRRR elsewhere.

@Hossam Elaskalani You might want to house hack a single family. An owner occupied multi fam is a great idea but the low down payment makes it hard to get an offer accepted in competitive situations. Are you trying to buy within the 495 belt?

I agree with @Jason Regan . Buying within driving distance to your first investment property is important and you’ll be able to oversee vendors much easier and minimize and mistakes without having to hop on a plane.

@James Morrison

Hi yes, I am looking within the 495 belt. I was thinking owner occupy Multi or SFH but I guess I'm more comfortable with condos.

However I do see more benefit in SFH/Multi vs Condos but I see condos as an "easier" investment which is why I've been looking at those.

I intend on leaving MA in about a year or so as I will be relocating for work around that time so another pro of a condo is it is easy to manage from afar since HOA will take care of most things.

No problem @Hossam Elaskalani ! I am closing this week on a 4 family in Athol with a partner. I also was supposed to close on a 2 family last month in Fitchburg, but probate was done improperly. This delayed the process and I am set to close on this next month. My purchasing strategy currently is for cash flow as I can use this to snowball to more properties quicker. I buy in areas with higher cap rates. On the flip side these properties will not appreciate a large amount in value, As a note, both these properties should be full BRRR.

@Hossam Elaskalani

The Athol deal was on market. This is an area that is not saturated with investors so we were able to make an offer on MLS and gain the property. Between myself and the investor I work closest with we have bought 5 off of MLS over the past 12 months. Three of these were flips and Two BRRR(or close to).

The others we have found offline through marketing and networking with other investors.  Facebook networking is actually how I found the 2 family I spoke about.  

MLS is becoming very very hard to find deals on. I basically try to get in day 1 or wait till the listing is old and no one is paying attention to it anymore.