Out-of-State Investors: What Would You Change If You Started Over?

Question

For those who invest out of state, if you could go back to when you first started, what would you do differently? Would you choose a different market, build a better team, or take another approach? Looking to learn from those with experience in remote investing!

Michael Smythe · Answer

Account Closed what we see investors doing wrong:

1) Not understanding Class A, B, C & D properties and HOW their ROIs are different.- Property Class will affect location, tenants, maintenance, vacancy, etc.

2) Not doing enough of their own due diligence when buying a property. - Trusting agents & PMCs too much!

3) Naively expecting paper results to be real results.

There's a lot more, DM us if you'd like to chat about them.

Becca F. · Answer

Would have bought one higher quality asset (Class A or B) in Indianapolis metro area and not two Class C homes "cash flow on paper" which in reality I'm negative most months (sold one home to cut my losses) - constant repairs called in by tenant. My Class A (nice suburb and great schools) is doing well, except for the significant property tax increases.

Don't buy sight unseen. Properties and neighborhoods look much different in person than in photos/videos.

Would have talked to property management companies first to ask about rents, tenant base, etc. And talked to contractors - I did all off this after closing on the homes.

Would have had a local investor (unbiased party) walk the properties before I made offers. Will never again buy any 1920 "renovated" homes in Indiana (or any other state).

Would have looked up property tax records before making offers. If it shows change of ownership with LLCs every 2 to 3 years, not a good sign.

Would have probably bought one SFH in Nevada if going OOS - low property taxes, good appreciation and much closer to visit (drive to Reno or short flight to Vegas).

Would have also considered buying one SFH in California (not the Bay Area) but maybe Sacramento area or elsewhere in NorCal and done a mid-term rental to lessen negative cash flow. For me it's quality over quantity now.

Travis Biziorek · Answer

I would have bought more... LOTS more.

Back in 2019-2021 I was buying up SFH's and duplexes in Detroit. I was pretty leveraged with my HELOC, 401k loans, etc. but I could have been even more aggressive.

I only have 12-doors though. Everyone thought I was nuts and, while I did my best to ignore it, I'm sure it impacted how aggressive I was in the end.

Everything I bought is up 2-3x and last year I had net rental income on my taxes of $86,000. I expect 2025 to be higher.

I did a cash out refinance recently on a duplex I bought in 2019. I paid $62,000 for it and it's generated me $1,000/mo net cash flow like clock work ever since. It appraised for $201,000 the other month and I put $103,000 in my pocket after closing costs and paying off the old note.

I wish I had about 20 more of those...

Mike Paolucci · Answer

Would have maybe taken a couple extra trips to look at the neighborhoods a little harder but I wouldn't have chosen a different market. Been pretty happy with my decision so far and even moved here after my initial 4 buys.

Having realistic expectations was something I had to accept early on.

Property managers are going to be key for your investing as well. Definitely want to talk/meet with a few different ones if possible and try to get to know them and their companies if possible on the front end so you don't have to fly in after the fact.

Austin McClain · Answer

Property management is huge when investing out of state. It needs to be a top priority to get set up with a good PM so you never have to fly in to address issues

Cedric Ferrell · Answer

Account Closed

Investing out of state can be a great way to scale, but many investors wish they had done more due diligence before jumping in. Key lessons include choosing markets based on long-term fundamentals (not just affordability), building a strong local team before buying, and starting with manageable properties instead of heavy rehabs. Planning for property management, scaling strategically in one market, and being conservative with financing can also help avoid costly mistakes.If you're considering out-of-state investing and need insights on markets, property management, or financing, DM me and I’ll point you in the right direction!

Good luck!

Justice Bowers · Answer

Account Closed This is a great question! I assist investors in locating properties that fit their investment needs in DFW, TX and Birmingham, AL; so, this thread has been very beneficial!

Jared Smith · Answer

Account Closed I love this question. I help facilitate out of state investors find performing rental properties in various markets in the Midwest/midsouth so I am going to be taking notes on the comments here!

Account Closed · Answer

Thank you Becca!

Barry Mathis · Answer

Just to be clear , are you looking to purchase additional properties if the numbers are right ?

Out-of-State Investors: What Would You Change If You Started Over?

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