Investing In State vs. Out of State (Chicagoland Area)

[Sarah Patel]

Hello! I am new to the REI world and my husband and I's goal is to invest in a property by the end of the year and use as a STR. We live in the western suburbs of Chicago and have been weighing the pros and cons of investing in-state vs. out of state. While the current suburb we live in (Elmhurst) seems to be appreciating very well and surrounding comps support list to price ratios of 90% and up, we aren't sure if it's the best market for a STR (perhaps a flip).

While there may be better deals out of state, we worry that out of state investing may be too much for us  to handle as our first property. I say this because we have a toddler and have another on the way and both of us work W2s. I work 40hrs/week while my husband works anywhere from 50-90hrs/week. Do people still invest out of state in our situation? Sure! And they have my utmost respect. I'm just not sure how feasible it is for us personally. That doesn't mean we aren't open to investing out of state further down the line. I'm just wondering if investing locally makes any sense. Of note, we would use our realtor who helps us purchase our current home, already have some contractor contacts, repairmen, etc- making our core 4 already in place here. Our ultimate goal (as is anyone else's) is to be able to scale back our time at our W2s and replace that with income from real estate. We know that's not going to come with the first property but want to give ourselves the best opportunity to learn we can. 

Bottom line: anyone who has recently invested in the Chicagoland area think that there's still plenty of opportunity here? Or would you argue that the additional challenges that come with out of state investing are worth the potential of a better ROI? We are also hesitant about timing and whether or not to wait and see if the current administration actually restores the TCJA full bonus depreciation provision.

Any feedback/input is welcome. Thanks for reading! Excited to be here and learn. 

[Payton Haight]

Hi Sarah, welcome to BP! I started investing long distance in Illinois (Bloomington) and Ohio when I was living in CA working a full-time job - I had both long-term and mid-term rentals. The long distance investing part was definitely doable with a full-time job as long as you have a good team (realtor, handyman, cleaner, etc.) in the area. 

I would certainly prefer investing locally over long distance if you can find deals in your area that meet your goals/criteria. I decided to invest long distance because the numbers for deals in CA did not meet my goals. I know there are quite a few people on here from the Chicagoland area who can likely provide insight for you on that market. 

If you decide to look out of state, you can find deals for a wide variety of strategies (STR, MTR, BRRRR, fix & flip) that work well in Columbus, OH. It is an investor friendly state and has good long term growth metrics. Feel free to reach out if you have any questions or would like to discuss further. Glad to help or answer any questions!