Reality check - investing out of state

Out of State Investing
1yFollow

Reality check - investing out of state

Mark Bennett
Member since 2025 · 2 posts · 8 votes

I've done the homework. I've scoured every market across the U.S. I've built spreadheeets, saved up capital, and have been making moves. After endless hours of research I found the deals that pencil! The glorious beginning of financial freedom! Easy, right? I think one thing people don't talk about much is how difficult or unwelcoming it can be for someone out of state trying to buy investment properties. Maybe they don't want your California type investing in Texas. Maybe they don't want a New Jersey guy buying up property in Memphis. This is all made up, of course, but who knows? I've had some very weird / shady things happen to derail deals that were nearly done. For example, I made a fairly aggressive offer on a very stagnant quad plex listing in Alabama that was listed on the MLS for a month and my price was quickly accepted. Magically, within less than 2 minutes of of my congratulations text I was notified that an escalation clause offer popped up to beat whatever I offered + X. Really? Within 1 minute that offer magically appeared? I've also had under contract deals derailed because of weird things like tenants with free roaming birds tenants were hiding, and most commonly people flat out hide numbers or lie about rental income and annual expenses. I'm not trying to discourage anyone from making a splash but my experiences have reminded me why investing where you're familiar can be a much more prudent option even if the numbers don't "pencil" as well as they do in areas you are not familiar with. Remember, it's a long game and real estate always wins. You simply don't know what traps you're walking into in these out of state markets. Without a doubt there are plenty of great opportunities but my experience here has taught me to be much more prudent with who I trust and being boots on the ground is absolutely essential in any area i explore investing in going forward. The journey is young, but that's been my experience so far and wanted to share it with this community that's been so helpful to me with the searches. Best of luck to all of you!

7Reply
302 views

Most Popular Reply

Mendy M.
Rental Property Investor · Member since 2024 · 27 posts · 33 votes
11mo
Quote from @Mark Bennett:

I've done the homework. I've scoured every market across the U.S. I've built spreadheeets, saved up capital, and have been making moves. After endless hours of research I found the deals that pencil! The glorious beginning of financial freedom! Easy, right? I think one thing people don't talk about much is how difficult or unwelcoming it can be for someone out of state trying to buy investment properties. Maybe they don't want your California type investing in Texas. Maybe they don't want a New Jersey guy buying up property in Memphis. This is all made up, of course, but who knows? I've had some very weird / shady things happen to derail deals that were nearly done. For example, I made a fairly aggressive offer on a very stagnant quad plex listing in Alabama that was listed on the MLS for a month and my price was quickly accepted. Magically, within less than 2 minutes of of my congratulations text I was notified that an escalation clause offer popped up to beat whatever I offered + X. Really? Within 1 minute that offer magically appeared? I've also had under contract deals derailed because of weird things like tenants with free roaming birds tenants were hiding, and most commonly people flat out hide numbers or lie about rental income and annual expenses. I'm not trying to discourage anyone from making a splash but my experiences have reminded me why investing where you're familiar can be a much more prudent option even if the numbers don't "pencil" as well as they do in areas you are not familiar with. Remember, it's a long game and real estate always wins. You simply don't know what traps you're walking into in these out of state markets. Without a doubt there are plenty of great opportunities but my experience here has taught me to be much more prudent with who I trust and being boots on the ground is absolutely essential in any area i explore investing in going forward. The journey is young, but that's been my experience so far and wanted to share it with this community that's been so helpful to me with the searches. Best of luck to all of you!

Real estate agents and other people trying to make money… Exaggerating rent numbers, and the prices for insurance and taxes, is nothing new or exclusive out of town investing.
You always have to confirm and cross reference numbers that people give you, especially if the one giving them has incentive to exaggerate them.

On the point of people derailing your deals: it’s very possible that those things had nothing to do with you being out of state, but it is possible that it didn’t have to do with that as well.
It really depends who you work with, and which market you’re in - for some people business’s business, and they don’t care where in the country you are, while others  might have slight reservations about you being an out of town investor buying up property. Also, some markets have tons of foreign investors, so it’s no big deal for them, while others, that’s not the case.



Look: Nothing works for everyone, but I think it’ll depend on which market is your local market, who your team would be, and last but not least, your personality, skills and preferences.

2Reply
See this reply in the discussion

14 Replies

Jump to latestLatest
  • Jules Aton
    MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
    1y

    Good post. Pros and cons to each strategy but I'm a mind your own farm type investor. I have always stayed within 90 minutes of my primary. It has worked well for spotting neighborhood trends, creating contacts with local tradesmen and hearing about off market opportunities. In general I believe colleagues treat each other better when there is a relationship that is built on repeated in person interactions. This is evident in the current work from home zoom meetings without the courtesy of turning on video world also. 

    0Reply
  • Shawn McenteerBusiness Member
    Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
    1y

    Hi @Mark Bennett why not stay local to where you live, perhaps sniff out some of this sketchy business before it happens?

    973-975-3895
    House Hacking New Jersey563 Reviews
    WebsiteView Page
    1Reply
  • Rose Cole
    Rental Property Investor · San Diego, CA · Member since 2025 · 11 posts · 9 votes
    1y

    Thank you for your share, Mark! I've been considering investing out of state, and as a newbie, this helped me get clear that I'm not going to do that. I wondered if these types of things you mentioned would come up, and this is all I needed to hear. I don't have time for those kinds of shenanigans! Thank you again, and best of luck to you. 😊🙏🏼

    1Reply
  • Mendy M.
    Rental Property Investor · Member since 2024 · 27 posts · 33 votes
    11mo
    Quote from @Mark Bennett:

    I've done the homework. I've scoured every market across the U.S. I've built spreadheeets, saved up capital, and have been making moves. After endless hours of research I found the deals that pencil! The glorious beginning of financial freedom! Easy, right? I think one thing people don't talk about much is how difficult or unwelcoming it can be for someone out of state trying to buy investment properties. Maybe they don't want your California type investing in Texas. Maybe they don't want a New Jersey guy buying up property in Memphis. This is all made up, of course, but who knows? I've had some very weird / shady things happen to derail deals that were nearly done. For example, I made a fairly aggressive offer on a very stagnant quad plex listing in Alabama that was listed on the MLS for a month and my price was quickly accepted. Magically, within less than 2 minutes of of my congratulations text I was notified that an escalation clause offer popped up to beat whatever I offered + X. Really? Within 1 minute that offer magically appeared? I've also had under contract deals derailed because of weird things like tenants with free roaming birds tenants were hiding, and most commonly people flat out hide numbers or lie about rental income and annual expenses. I'm not trying to discourage anyone from making a splash but my experiences have reminded me why investing where you're familiar can be a much more prudent option even if the numbers don't "pencil" as well as they do in areas you are not familiar with. Remember, it's a long game and real estate always wins. You simply don't know what traps you're walking into in these out of state markets. Without a doubt there are plenty of great opportunities but my experience here has taught me to be much more prudent with who I trust and being boots on the ground is absolutely essential in any area i explore investing in going forward. The journey is young, but that's been my experience so far and wanted to share it with this community that's been so helpful to me with the searches. Best of luck to all of you!

    Real estate agents and other people trying to make money… Exaggerating rent numbers, and the prices for insurance and taxes, is nothing new or exclusive out of town investing.
    You always have to confirm and cross reference numbers that people give you, especially if the one giving them has incentive to exaggerate them.

    On the point of people derailing your deals: it’s very possible that those things had nothing to do with you being out of state, but it is possible that it didn’t have to do with that as well.
    It really depends who you work with, and which market you’re in - for some people business’s business, and they don’t care where in the country you are, while others  might have slight reservations about you being an out of town investor buying up property. Also, some markets have tons of foreign investors, so it’s no big deal for them, while others, that’s not the case.



    Look: Nothing works for everyone, but I think it’ll depend on which market is your local market, who your team would be, and last but not least, your personality, skills and preferences.

    2Reply
  • Stephen FisherPro Member
    Rental Property Investor · Costa Mesa, CA · Member since 2017 · 26 posts · 16 votes
    11mo

    @Mark Bennett I've been exactly where you are with the frustration on out of state investing. You definitely have to sort through inaccurate numbers and people with an agenda. 

    I think the biggest problem is finding a steady source for good deal flow and making your margins work while competing against local investors.

    Local investors often do more volume and as a result see deals first. So a lot of the home runs are off the table before your eyes are on it. (This issue forced me to try my hand at starting my own out of state wholesale company years ago. I'd advise against this haha). So you're probably not the first set of eyes of these sketchy deals and their isssues. 

    The high volume local investors have less expensive rehab costs because they run their own crews. So they can pay more on the purchase than you can. Probably why you're losing out on escalation clauses.

    Also, not all but most people see out of state investors as an opertunity to make money, not a long term partnership. Not always the case (I've found great people in both TN and MO) but there's many investors that pop in and dabble in a market. Unless you're coming in with serious cash it's hard to show up in a market and get solid deals on one-offs.

    My advise would be to find good people in the market and build relationships first. Find people who talk you out of deals instead of into them and want a long term partnership with you. 

    Happy to chat as I've battled with what you're experiencing. There's hope. 

    1Reply
  • Jules Aton
    MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
    11mo

    @Stephen Fisher makes excellent points about expectations. Not that you should buy a property with numbers that don’t add up but you will not get first pick especially early on. I’ve been a small investor for 3 decades and have only gotten 2 deals that were cream of the crop. It’s all good though because so far I have made a profit on every property. 

    0Reply
  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    11mo

    OOS investing is hard. In theory, it should work, but that's theory. Realistically, you never get the same results as a local investor, because you have management inefficiencies and an additional OOS expenses burden. I would ballpark this at 20% or more. Things that are easy when you are local get hard when you are remote and have to rely on other people to check or do.

    For context, I've been investing for over 15 years and after I quit my job, I got licensed and have worked with a lot of OOS investors, so I have seen both sides. Here is my advice:

    1.) the people you work with matter more than the market you choose. A great team in a mediocre market will still deliver much better results than a poor team in THE best market.

    2.) Narrow the OOS gap. Pick a city you used to live in and know a little, or one you often visit for work or family, or at least is easy to get to so you can visit often and learn the market. Knowing more or being there more often will narrow the gap between you and a local investor.

    3.) Every interaction, every repair, every step is subject to issues and will increase your OOS cost burden. You can't control the issues, but you can dramatically reduce the number of interactions. Instead of a fixer-upper, pick a quality property that is in or near move-in-ready condition. Pick a desirable neighborhood that produces quality tenants.

    Just to drive the point home, here is what I am personally doing: over the last 7 or 8  years we have gone from investing in basically half of Milwaukee (1.6 million metro area) to only investing in a 20 min zone around where we live. There are still a few more properties in the city we are going to sell and exchange for homes in the suburbs (better tenants, higher rents). There are a lot of synergies for our contractors and maintenance team to have everything is more concentrated. We also deal with fewer municipalities and stupid little things like water bills etc 

    2Reply
  • Charles ClarkBusiness Member
    Real Estate Broker · Milwaukee, WI · Member since 2020 · 306 posts · 209 votes
    11mo

    @Mark Bennett

    Thanks for sharing your experience! This is a really honest and valuable perspective. It’s true — being local or having trusted boots on the ground can make all the difference. Appreciate the reminder that real estate is a long game built on trust and patience.

    [email protected]414-719-6090
    Raise the Standard RE LLC55 Reviews
    View Page
    0Reply
  • Henry Lazerow
    Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
    11mo

    The area is the biggest factor on deal honesty. Out of state investors look for cashflow which tends to be in lower class areas. In lower class areas you deal with scummier people who lie to you and fake numbers. Out of brokering 50+ north side chicago I can only think of a single one where we got fake numbers on a lease. In the suburbs where its a bit lower class areas, multiple times I have seen fake rents where tenant is really paying less, landlord lies about some numbers or that someone is up to date who isn't, etc.

    One other tip. When we work with out of state buyers we absolutely do not disclose it. Just have your agent say buyer is traveling and we are doing video tour. Out of state buyers do cancel deals at a higher rate so a good listing agent will present their offer as riskier. 

    0Reply
  • Dennis MinaryPro Member
    Homeowner · New Port Richey, FL · Member since 2025 · 23 posts · 18 votes
    11mo

    This is a doggie dog business. A lot of dishonesty out there . It's a shame but it's reality. 

    0Reply
  • Camren BerryPro Member
    AZ · Member since 2021 · 86 posts · 14 votes
    11mo

    i sent you a dm. I can help you out here big time

    [email protected]480-818-6158
    0Reply
  • Account Closed
    Investor · Toledo-MetroDetroit-Dallas · Member since 2022 · 122 posts · 71 votes
    11mo

    @Mark Bennett totally agree! It's almost like they wanna scam us as soon as they find out we are out-of-state. It's definitely a people business and while there will be many bad apples out there my goal is to find the few good ones and work with them exclusively!

    0Reply
  • Arman AhmedPro Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 929 votes
    11mo

    @Mark Bennett

    Great post, Mark — you nailed what a lot of out-of-state investors eventually realize. The numbers might look great on paper, but without trusted boots on the ground, deals can fall apart for all sorts of unexpected reasons. I’m based in the Midwest, and one thing I’ve noticed is that success for out-of-state investors usually comes down to building the right local relationships — agents, contractors, and property managers who understand investor needs and can provide transparent, realistic numbers. It’s not easy, but once that trust network is built, the opportunities become much smoother and more predictable. Out of curiosity, which markets have you found the most frustrating so far?

    [email protected]614-418-6081
    0Reply
  • Steve K.
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    10mo

    Your experience so far is only the tip of the ice-berg. In addition to OOS investing being more difficult and higher-risk in general, legit fraudsters also target out of state investors who don't know any better. One thing I have learned in this business is 99.9% of people look out for their own best interests first. Combine that with people choosing a market just because it's cheap (somehow over-looking the golden rule of "you get what you pay for"), and you can begin to see why the failure rate of OOS investors is so high. 

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free