INVESTING OUT OF STATE

10 Replies

What are the cons of investing in rental properties out of state? Financial wise. Thank you.

Pros - same money, you'll learn to manage human capital more efficiently, you have FAR better markets available to you

Cons - haven't' noticed any yet

Investing OOS is awesome, and easy. Living close doesn't provide any real benefits imo It's not like you can go to a tenants house and shake them down when rent is late. All investing might as well be long distance.

Alexander Felice

Interesting and thank you for your input. Wouldn't some cons be management fees and I'm not sure if it's true, but that you get taxed heavier?

The pros is you can invest in better investment areas. The cons are that there are a lot of risks associated with buying out of state and it's hard to find good deals that way. I run down my recommendations for out-of-state investing here: https://www.biggerpockets.com/renewsblog/2014/12/23/investing-out-of-state-essential-items-to-vet/

Originally posted by @Jordan Santiago :

Interesting and thank you for your input. Wouldn't some cons be management fees and I'm not sure if it's true, but that you get taxed heavier?

 management is 10% no matter what. It's false accounting to think you 'save' that money if you do it yourself.

You should use management regardless of location. You make the most when you effectively manage human capital, not buildings.

Alexander Felice

Originally posted by @Andrew Syrios :

The pros is you can invest in better investment areas. The cons are that there are a lot of risks associated with buying out of state and it's hard to find good deals that way. I run down my recommendations for out-of-state investing here: https://www.biggerpockets.com/renewsblog/2014/12/23/investing-out-of-state-essential-items-to-vet/

Thank you for your feedback! Nice little read there. 

I never thought about it like that Alexander. Good point, thank you. 

Hello @Jordan Santiago

I would recommend reading the BP book Long-Distance Real Estate Investing.

So far it really makes you develop processes and relationships at all levels so you can be involved as a manager of all the functions but you can also find deals.

Why make less money near you when you can make more elsewhere?

Let me know if you have any questions, happy to help!

@Jordan Santiago So I visit my out-of-state properties twice a year. Two plane tickets, 2 hotel stays, 2 car rentals, blah, blah, blah. That doesn’t sound like a huge expense and it’s not...unless...you do it because you own one SFR cash-flowing $100/month. Poof! Goodbye profit! Now I have 36 units so it doesn’t matter but it’s brutal to start.

And, though it hasn’t happened to me yet, you risk the properties “slipping” in terms of upkeep. I can’t just drive 20 minutes to my apartments and just stare at them to see how they’re doing as an “audit”. I have to depend on my PM. She doesn’t a great job but if she ever didn’t it would probably take me months to see it materially impact the financials 🤷🏻‍♂️

Originally posted by @Mike Taravella :

Hello @Jordan Santiago

I would recommend reading the BP book Long-Distance Real Estate Investing.

So far it really makes you develop processes and relationships at all levels so you can be involved as a manager of all the functions but you can also find deals.

Why make less money near you when you can make more elsewhere?

Let me know if you have any questions, happy to help!

 Thank you so much, appreciate it!

Originally posted by @Andrew Johnson :

Jordan Santiago So I visit my out-of-state properties twice a year. Two plane tickets, 2 hotel stays, 2 car rentals, blah, blah, blah. That doesn't sound like a huge expense and it's not...unless...you do it because you own one SFR cash-flowing $100/month. Poof! Goodbye profit! Now I have 36 units so it doesn't matter but it's brutal to start.

And, though it hasn’t happened to me yet, you risk the properties “slipping” in terms of upkeep. I can’t just drive 20 minutes to my apartments and just stare at them to see how they’re doing as an “audit”. I have to depend on my PM. She doesn’t a great job but if she ever didn’t it would probably take me months to see it materially impact the financials 🤷🏻♂️

 Ah, makes sense. So you would recommend starting close to home first, and then expanding out of state later on? Thank you for the reply. 

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