Out-of-state investing can be costly, time-consuming, and nerve-wracking. It’s important to keep these and other factors below in mind as you explore this strategy, and ultimately make the decision that’s right for you.
The Challenges of Out-of-State Investing
Investing Out of State Can Be Nerve-wracking
This can make anyone nervous—you need to be prepared to give up a level of control you’d usually have when investing locally.
It can take time to invest out of state
It takes time to establish any team, but can take even longer if you’re not on the ground. It also takes time to choose the right market, and really learn the ins and outs of that market.
You’ll need to dig around for information on the best rental areas, what kind of returns you can expect, where you should flip, and what areas you should stay away from. You won’t have a high level of familiarity with the area, which means you’ll need to put in more time to even begin investing out of state.
Investing out of state can be more expensive.
You no longer have the option of managing your own rental property or renovation. This means higher management and contractor fees. Fortunately, this doesn’t necessarily have to be a bad thing.
The Good News: All of These Things Can Be Overcome
The Possibilities Are Limitless With Out-of-State Investing
You can live anywhere and invest anywhere. If you find a hot market somewhere, you can jump in and take advantage, regardless of your physical location or current situation.
You can pursue markets with less competition and scale more quickly. If you look hard enough, you’ll be able to find the right market and property for your budget, and can very likely also find the returns that you’re looking for that might not be available where you live.
Investing Out of State Provides Freedom
Once you’ve built your team and hire contractors, the large majority of your time will be spent receiving reports and paying the bills. You no longer actively manage the property or the renovation. Instead, you’re sitting back, watching it get done, and getting paid.
Out-of-State Investing Allows You to Diversify Your Portfolio
Just like anything worth pursuing, you have to put in the work, but with the right mindset and a solid understanding of the pros and cons, out-of-state investing may be worth considering.