Out of State For First Property?

Question

Afternoon,

New investor here with no properties anywhere (other than the one my family and I live in and own) but putting things together to start soon.

Living in Michigan but curious if investing in your first property out of state is a crazy idea.  Looking at multiple cities in the Midwest/PA area

Thoughts?

Steve Harlow · Answer

Better to do OOS then no property if its too expensive locally. As others have stated forming a great team is the first thing you need to do.  I have properties in 5 states and have been doing this for 30 plus years. The above is the BEST advice I have ever seen.

All deals have a POTENTIAL ROI but you won't get it if you don't have the team !!!!

Mike Paolucci · Answer

Hey @Mark Morosky. Welcome to BP. OOS investing for your first property isn't a crazy idea at all. Lots of people, including myself have done it.

Best way to learn is by house hacking or investing locally (few hours from your home) but if that's not an option (pricing is too high or other factors) then OOS is the next best option. Most of my clients have started their journey by investing out of state.

The biggest key will be making sure you have the right teams in place to help you manage everything. I'd recommend an investor focused realtor who also owns properties themselves. They'll be able to give you some recommendations and are normally willing to share their own mistakes to help you try to avoid making the same. They should also be able to put you in touch with local lenders (who know the market and what to expect from properties), property managers and contractors if need be.

Happy to share some experiences and other mistakes I've made through the years.

Kerlous Tadres · Answer

Totally get where you're coming from and no, it's not crazy to invest out of state for your first property. A lot of new investors go that route when their local market doesn’t offer the returns or opportunities they’re looking for.

The key is having a solid team on the ground (agent, property manager, contractor) and doing your homework on the market. Try to visit in person if you can walk neighborhoods, talk to people, and get a feel for the area.

JooYung Choi · Answer

Investing out of state is challenging but definitely possible. Having someone you can trust out there is the biggest hurdle in my opinion. Since you won't be able to visit your rental readily, someone who can give you the ins and outs and no BS is key.

Everything else is fairly similar to owning a rental nearby. With that being said, maybe consider a rental in state so you can get your systems solid and pursuing an out of state property after?

Have you thought about buying another primary home for your family and renting out your current home?

Nicholas L. · Answer

@Mark Morosky

i don't understand - if you live in Michigan, why would you invest in Pennsylvania?  invest in Michigan =)

go to meetups.  network.  call lenders.  look at properties.  cast a wide net - 30 minutes out, an hour out.

hope this helps

Drew Sygit · Answer

@Mark Morosky why are you looking at PA when Detroit is closer?

What city in MIchigan are you currently in?

NOTE: one of the biggest challenges investors have is keeping tabs on their properties so contractors and PMCs don't rip them off.

If your in Michigan, keeping tabs on a proerty in Detroit will be so much easier than doing so in PA!

DM us to chat more about Detroit opportunities!

Bernice Retzloff · Answer

Hey @Mark Morosky!Not crazy at all! Tons of first-time investors (especially from higher-priced or slow-growth markets) start out-of-state and do really well, as long as they have the right team in place. Markets like Memphis are a great example: you can still find fully renovated, tenant-ready single-family homes in the $100K–$150K range with solid cash flow, low vacancy, and strong rental demand driven by big employers like FedEx and St. Jude. Plus, the landlord laws are friendly, and with a good property manager, it can be a very hands-off experience. The key is choosing one market to learn deeply and building your local “core four” (agent, lender, contractor, and property manager). If you’re open to checking out Memphis, I’d be happy to help you explore some real numbers and how other first-timers are starting here. You're on the right track!

Clayton Silva · Answer

I started as an OOS investor.  I was living in CA and buying in NC (about as far apart as you can get).  It worked really well for a few years until my property manager retired and I had to find new ones.  New PM was not great, long story short, I ended up managing myself.  It was a good learning experience, but we ended up offloading most of the properties because the ROE was so low.  There are definite pros and cons to OOS, but you have to get laser focused on your goal and your resources to ensure you are investing for the right reasons in the right places.

Pros:

- more options to invest as you aren't as market limited

- forces you to build a business and have teams in place to handle the day to day ops

- can keep you emotionally less invested and hopefully help make smarter decisions

Cons:

- harder to manage because you are going to be managing property managers, contractors, realtors, etc but doing it from a distance.

- harder to get things done at weird hours for emergency repairs or issues that come up

- easier to get taken advantage of

Always start with the goal first and make sure the types of properties, the market, the tenant/landlord laws, the business environment etc. of where you invest are actually aligned with your goal.

Out of State For First Property?

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