Investing out of state for a FIRST rental property ever - Y/N?

[Olivia Evans]

Hello,

Has anyone had any experience in choosing their first rental property to invest in EVER, to be out of state? Like the full experience of acquiring a property, managing the rehab, and then managing the rental afterwords either directly or through a property manager? And if so was this a good or bad experience?

It obviously seems easier to have the property somewhere close where you can easily get to it, but just wondering if anyone has done this successfully and would be willing to share whether that would advise this way of working when it comes to choosing that first rental property.

[John Roesler]

@Olivia Evans I purchased my first property out of state and my second property in state. I'll share some of my learnings.

Out of state (KC Missouri):

- The good: it was significantly cheaper than my home state - almost 1/3 the price. It's cash flowing now, nothing major, but I'm playing the long game and not looking for huge cash influxes each month. And I spend less than 2 hours a month doing anything related to the property. My new property managers are excellent! Communication is great, and they actually look for things that need / could be improved on the property and suggest them for me to add to my property backlog.

- The bad: The first management company I had was terrible. Communication was almost non existent. They got me a horrible tenant that trashed the place and cost me $5K to repair. I'm sure others have had success with section 8, but I am wary to rent to a section 8 tenant again.

In state (St. Paul Minnesota):

- The good: I am close by, so if something goes wrong and it makes sense for me to handle it, I have the opportunity. It's been rented since day one and cash flowing quite nicely. Property management is good and handles most everything. 

- The bad: It's close by, so honestly I have a harder time staying away. And my goal is passive real estate - because I have a full time job that I love that pays well and small children at home who are my top priority.

Overall, the only thing I wish i would have done differently is spent more time vetting property managers on my out of state property so that I could have avoided all the expense of the bad one and the bad tenant. I bought from a flipping group and I think they just tried to fill it with a body so it could be rented and cash flowing for the sale. The group I have now is also a real estate agency, so I would consider buying additional properties in the KC market with them now that we have trust built up! 

Best of luck to you! I have been very inspired by BiggerPockets community and that's what pushed me to just do it and get buying properties. That's also my personality to dive in head first and learn by doing! There are things I would have done different, but I don't regret where i've ended up.