Author Topic: Would you invest in a rental property outside your own state ?  (Read 3524 times)

lamachin007

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Would you invest in a rental property outside your own state ?
« on: October 05, 2016, 10:41:02 AM »
I would like to invest in realstate, but I live in Miami, and real state prices are sky high, basically at the same level or higher than before the market crashed. I see a lot of reasonably priced property in states like Texas, which makes me think that I could buy there and collect rent.

How would I mange the property since I can't really keep an eye on it ? It this a smart move ?

Best Regards,

sammybiker

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Re: Would you invest in a rental property outside your own state ?
« Reply #1 on: October 05, 2016, 02:58:09 PM »
I invest out of state but that's because when I started buying, I was outside of the country.

There are plenty of cash-flowing deals within an hour drive of Miami - I'd identify some neighborhoods that are an easy drive away, learn them inside out, connect with other investors buying in those areas and go for it.  No need to buy out of state.

srob

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Re: Would you invest in a rental property outside your own state ?
« Reply #2 on: October 05, 2016, 03:13:48 PM »
I invest out of state..about three hours away. It may depend on whether you are the kind of person that wants to manage and fix the place yourself or pay someone else to do it. If you are just starting out, I would recommend getting a closer place to manage it yourself and learn the ropes, then you can branch out later if needed for higher returns once you get your feet wet. I manage some of my rentals and have a property manager for others. With a good manager, you really don't have to be local...I haven't visited one of my multiunit places (12 plex) in 6 months or so. When I do, it is usually a drive by or I check out the common areas to make sure they are clean, etc.

LiveLean

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Re: Would you invest in a rental property outside your own state ?
« Reply #3 on: October 05, 2016, 06:36:44 PM »
I live in Florida and have a weekly beach rental in Virginia Beach. But it's in an area I know well from childhood -- parents had a home two blocks away -- and I use the same management agency my parents did years ago. Plus I use the home occasionally and plan to spend more time there when the kids are grown; I love the place. If any of those pieces weren't part of the equation, I can't imagine dealing with it from 800 miles away.

CashFlowDiaries

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Re: Would you invest in a rental property outside your own state ?
« Reply #4 on: October 06, 2016, 06:45:49 AM »
I was in a similar situation living in Austin, TX.  Wanted to buy cash flowing properties however the numbers werent there anymore in Austin because the market exploded.  The market in Austin is still extremely high today.  Anyhow, long story short, i started buying out of state properties while living in TX.  I bought 3 in indianapolis, 1 in KC.   It doesnt work out for everyone and you have to be super picky about what you buy and where you buy from but if done properly, it could be very beneficial.

To this day, all my properties are still cash flowing nicely and I have yet to have any major problems.  Its been a huge blessing for me.  Anyhow, I was so intrigued with the price points in Indianapolis that I decided to move there.  I literally left Austin to move to Indy about 2 months ago for the sole purpose of lowering my cost of living and to enhance my buying opportunities.   It was getting harder and harder to find good deals out of state and its always easier and better to locate deals locally.      I want nothing more but to be financially free and at the rate i am going now, i should be retired in my early 40s.

Anyhow, since Ive been living in Indy, I bought a new rental property and just put another one under just last week.  After this last one, I will have 7 investment properties under my belt all making me passive income.  Its pretty exciting.

So in other words, if what Benny is saying is true and you can find good cash flowing deals just an hour from you, as long as the demographics are right (meaning that area has good population growth/economy/etc..) then you should try and find something local.   If not, yes it could be a very smart move to start buying out of state.     Like I said above though, be very picky and make sure you find a good property manager because they can literally make or break you.

Good luck my friend!

lamachin007

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Re: Would you invest in a rental property outside your own state ?
« Reply #5 on: October 06, 2016, 10:35:13 AM »
Thank you everyone,

The next step would be to identify properties and an excellent property manager, I would buy properties in Indy, can you recommend trustworthy property manager, zip codes, I would buy a property that is less than 100 K to start of with and see how that goes :)

I believe that a dollar coming from Indy ,or Miami has the same value, is all about who gives you more dollars ;) (greater profit)

Thank you !

Cwadda

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Re: Would you invest in a rental property outside your own state ?
« Reply #6 on: October 07, 2016, 09:03:36 AM »
Thank you everyone,

The next step would be to identify properties and an excellent property manager, I would buy properties in Indy, can you recommend trustworthy property manager, zip codes, I would buy a property that is less than 100 K to start of with and see how that goes :)

I believe that a dollar coming from Indy ,or Miami has the same value, is all about who gives you more dollars ;) (greater profit)

Thank you !

If it's your first time I'd highly recommend starting local. You need to have an excellent contact out of state if you're far away. It's a lot easier to start building relationships within reasonable driving distance.

marty998

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Re: Would you invest in a rental property outside your own state ?
« Reply #7 on: October 10, 2016, 01:12:35 AM »
Yes I have outside my state. There are good reasons for doing so if you have a large enough portfolio (I don't yet!)

Little thing in Australia called land tax. It's a cash flow killer... but you can take advantage of a tax free threshold in each state.

Enigma

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Re: Would you invest in a rental property outside your own state ?
« Reply #8 on: October 10, 2016, 05:48:55 AM »
I live in Virginia and have most of my properties in TN.  Great property manager and I wasnt profiting the first 4 years.  I have been doing pretty good lately.  I think investing in property outside of your state is a learning experience at first.  More costly initial upgrades/fixes and a few extra expenses.  Completely doable.

clarkfan1979

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Re: Would you invest in a rental property outside your own state ?
« Reply #9 on: October 14, 2016, 01:24:15 AM »
You should be able to find a rental within a 3-4 hour drive of Miami. I would start searching on the gulf side from Sarasota to Naples. 

arebelspy

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Re: Would you invest in a rental property outside your own state ?
« Reply #10 on: October 23, 2016, 06:44:11 AM »
Yup, bought a number of properties outside the state we were living in.

I would like to invest in realstate, but I live in Miami, and real state prices are sky high, basically at the same level or higher than before the market crashed. I see a lot of reasonably priced property in states like Texas, which makes me think that I could buy there and collect rent.

Funny, cause Florida and Texas are both markets I keep my eye on, but FL is more attractive to me overall.

Quote
How would I mange the property since I can't really keep an eye on it ?

Hire a manager, or manage remotely when needed (get long term tenants and local contacts or home warranty).
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Grogounet

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Re: Would you invest in a rental property outside your own state ?
« Reply #11 on: October 27, 2016, 06:54:09 PM »
You guys surely have buyers agents in the States?

Spread your investments to spread the risk is a golden rule.

DeanW5

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Re: Would you invest in a rental property outside your own state ?
« Reply #12 on: October 31, 2016, 08:15:23 AM »
I see nothing wrong with it at all. But be careful. When you invest out of state, you must overcome your lack of familiarity with the out-of-state real estate market and with its local economic conditions. So itís better to hire out-of-state real estate agent, who knows that area very well.
You should get familiar with laws and regulations regarding property ownership and property taxes in a place where you don't live is another major challenge. So it's very important to build a great network of professionals to help you. One more advice for you is occasionally visit your property yourself.

lamachin007

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Re: Would you invest in a rental property outside your own state ?
« Reply #13 on: December 29, 2016, 10:44:43 AM »
Thank you everyone , and happy new year !

dpfromva

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Re: Would you invest in a rental property outside your own state ?
« Reply #14 on: January 11, 2017, 04:30:41 PM »
I invested out of state sort of accidentally, but learned a lot. My kid graduated in a city with a depressed housing market, and planned to work and live there long term. It seemed crazy to me that kid would continue to pay some landlord instead of me (can you say passive losses?), so with family help, I purchased a rowhouse to rent to kid at market rate (therefore, a very modest rowhouse). So this is not typical, I really know my renter, but this is what helped me:
1. I hired a well-rated local contractor to go around and look at houses with me with the realtor, in a one-day sprint. He charged $xxx per house, much less than inspection, with the hope of being hired for repair/remodel, which he was. I literally handed him an envelope full of cash on house viewing day. This saved me inspection costs on multiple houses (I inspected the one I made an offer on) and eliminated dud houses.
2. I bought a house with problems, but not such a level of problems that I was out of my league (blind auctions, tax lien sales would have been beyond me). This one had a ton of deferred maintenance, huge lien and judgment balances that were paid at closing (it could have been seized by the city at any time), and the closing was delayed twice, once when a new lien surfaced and once when (I am not making this up) some dude broke in, changed the locks, and fraudulently rented it out. The police never found him but they kicked out the "tenants."
3. I hired a well-rated local real estate attorney. My real estate agent was clueless once things got complicated, and I was not familiar with state and local laws and regulations.
4. I did an all-cash deal which allowed me to compete with the flippers prowling the same neighborhoods.
5. Because of the deferred maintenance that I had to do, I was forced to find an excellent gang of go-to repair people. Glad I have them now.
6. I researched like crazy to get a decent house on a good street in a low cost neighborhood.
7. I can get there by car the same day if I have to.
8. And, as noted and as is not usual, I have an awesome tenant who is very invested in the house's future (since they will likely either buy or inherit it from me)

TheGrimSqueaker

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Re: Would you invest in a rental property outside your own state ?
« Reply #15 on: January 18, 2017, 12:29:30 AM »
If you buy out of state, you still have to follow the laws of the state the building is in. You should know the laws inside out before investing.

I recommend hiring a local property manager as your agent. In many states, the law requires you to do this and to disclose the name and address of the agent. It's only humane: if your tenant is locked out late at night or there's a gas leak over the Thanksgiving holiday, you need somebody who can respond quickly.

It's true that having a property manager eats into revenue. But it's better to have it done by a pro than by, say, the person who lives across the street. If you have to evict, the pro can legally represent you in court (and the amateur frequently cannot). The only people I know who have tried to manage their investment property from outside easy driving distance have either hired local agents or have wound up in massive debacles due to not being able to respond to a tenant's problems in a timely fashion.

omega13

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Re: Would you invest in a rental property outside your own state ?
« Reply #16 on: January 18, 2017, 09:32:28 AM »
I am on the same boat right now. I'm in the Portland, OR area right now and looking at purchasing a rental property out of state. I looked around the Portland area, up to 3 hours away for a good year before I made the decision to look outside the state.

I am connected with the local REIA groups so I get multiple local emails daily about the current "deals" and compared to what's available out of state, they are ridiculously expensive.

To give an example, one realtor sent me a listing for a duplex that has a GRM of 20! I know there are lots of metrics to filter through deals but this is one that I glance at when something lands in my inbox.

If you're not familiar with it,  GRM = Price/(monthly rental *12). It roughly tells  you that for the rents you plan on collecting, it will take 20 years for this property to pay off for itself! And that's not taking into account all the other expenses.

Anyways, I concur with everybody else's comments and am being very careful myself.

I have a local investor friend that got started last year so he got me connected with a good agent. She has recommended additional professionals that I'm screening as well.

The one question that I'm debating in my head is, should I fly out to inspect every single serious property I am looking at purchasing?

Buying sight unseen is logically a bad strategy. However, the other part of me says, if you have trusted boots on the ground, who know the area well you should be able to trust them as long as you visit once in a while. If you are not super familiar with the area anyway, how helpful is it going to be to see every single one of them?

Knowing myself, I will probably end up going anyway. It will help to build rapport with the property management and other professionals.

Feel free to pm if you're curious to know more about my experience so far.
« Last Edit: January 18, 2017, 09:36:34 AM by omega13 »