Specialist · Salt Lake City, UT · Member since 2017 · 18 posts · 4 votes
Im looking at picking up some rentals out of state (Tennessee or Indiana). I have about $20k that’s sitting in mutual funds. However, I’m an inexperienced landlord; I own 1 rental locally. I’m looking out of state because it’s more affordable. Since I’m inexperienced at being a landlord, is investing in rentals out of state a bad idea?
It is not a bad idea but it is extremely important that you start by setting up your team with feet on the ground. You must have people you can trust to do the job you can not do to protect your money.
Ultimately the final decisions are yours and you will need to be on site to inspect any potential properties yourself. Trust in others must be very carefully measured.
Specialist · Indianapolis, IN · Member since 2016 · 841 posts · 480 votes
8y
You just need a good property manager. Also have to be careful about what you buy and what area you are in. If you look in Indy, you will see that it is street by street. Zip codes don't tell the full story.
Specialist · Lakewood, CO · Member since 2014 · 1k+ posts · 1k+ votes
8y
@Cameron Eaton both ways work great. I have good cash flow with local properties, and good cash flow with out of state. It just changes the type of diligence you put your heaviest focus on. Local is structure, condition, tenant screening, etc. Remote is your management team, rehab team, etc. They both end with a rented property, but the diligence requires a little different focus.
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
8y
Cameron Eaton Okay, I’ll be the mean guy that says it’s a bad idea. You have $20K to invest and if you can get a cash-on-cash return of 10% then you get $2K. That $2K will pay for the twice-a-year visits you make to check up on the property. So welcome to break-even-land. Now if you want to break-even on Property 1 because you want to buy a new property every year then I see searching for a new market, taking it on the chin the first year, and building scale for the long term. However, when you referenced about where the $20K was coming up, well, it’s probably not indicative that you’ll have $20K to invest every year on a perpetual basis.