Introduction
So, out-of-state real estate investing has piqued your interest, huh?
Maybe you’re looking for a short-term rental that doubles as a vacation home. Or maybe you want a multifamily property to house hack. Both great choices! 🙂
There are many great reasons to invest in real estate out of state. Not only is there a better chance to find a great deal, but you also get all the tax advantages of being an out-of-state investor.
But before jumping into the world of out-of-state investing, there are a few things you should know.
Let’s dive into it!
Can I buy property in other states?
Yes, you can buy property in other states, and it’s becoming more common every day. There are a few things to be aware of though, especially when buying a house sight unseen.
If you’re not a resident of that state and don’t intend to live there, you must ensure that you meet the state’s residency requirements. The process is different in every state, so talk to your real estate agent or contact the state department directly to find out.
Why invest in real estate out of state?
Investing in real estate can be a great way to build financial security. You may be wondering why you should invest in real estate out of state, though. Here are a few reasons why it’s worth considering:
- It’s easier than you think! Kurby makes it as easy as possible for you to get started. Our platform makes it simple to search for and analyze out-of-state properties to determine their property value so that you can get started quickly and easily.
- It’s more stable than other investments! Real estate is definitely one of the most reliable investments out there—and while there are always risks involved with any investment, real estate is less likely to fluctuate than stocks or crypto, so it’s a good option if you want something more stable than other options on the market right now.
- You’ll have better opportunities than most people do! If you’re looking for something that will give you more control over your finances, investing in out-of-state real estate is a great way to go about it—especially since you can find states with fewer regulations (which means less red tape), so there are more opportunities available for investors like yourself.
Benefits of out-of-state real estate investing
All real estate markets operate differently. It may be that your local market crashes andthere are no remarkable local investment properties. So you need to find a healthy real estate market to invest in. If it’s easier to cash flow in another market and you can collect rent remotely, then why not go for it, right?
A few benefits of out of state investing are:
Diversifying your investment portfolio. If you’re looking to protect your assets and make sure they grow over time, it’s a good idea to invest in different types of properties and in multiple locations. This can also help you avoid being too vulnerable to market fluctuations, since there’s no single market that’s guaranteed to be stable. By investing across the country, you can spread out your risk and protect yourself from any one area’s downturn.
More affordable homes. If you’re in a market where the cost of buying a home is prohibitively high, you may consider looking for cheaper options elsewhere. But what does “cheaper” mean?
In many cases, it means older homes that haven’t been updated for years—and that’s not necessarily a bad thing! There are plenty of benefits to investing in an older home, from lower costs and less maintenance to more charm and character.
And if your family has no intention of living in the house long-term (or ever), then investing in an older home might be just what you need.
Some markets are growing faster than others or have property values much lower than they would be local.
If you’re looking for an opportunity to invest out of state, consider searching for foreclosure properties or other discounted properties that may not be available locally.
Research is the most important thing
Before you buy any property, do your research. Make sure you understand the market. Talk to property managers, realtors, and locals. Don’t assume that just because a property is for Sale, it will be easy to sell later if you don’t like it. If the market has changed drastically since the time of purchase, then it may be challenging to sell at a profit.
It’s also important not to assume that a price listed online represents an actual offer on that property; people often list their homes at a below-market value in hopes of attracting buyers who might not even have looked into buying before they came across the bargain!
Finally, find an excellent real estate agent and property management company. A lousy agent or manager could leave you with nothing but headaches and a negative cashflow property.
Market research
The first step to investing in real estate is market research. Look at properties on the market comparable to yours in size, location, and condition. What are they selling for? Is it a reasonable price? If so, maybe your property would sell at a reasonable price too!
On the other hand, if the asking prices are higher than what similar properties have sold for recently (say, over the last six months), then it might be time to rethink your strategy.
If you’re buying an investment property that needs work or has been vacant for some time, contact a contractor or home inspector before making an offer. This can help you understand where money will need to be invested so you have realistic expectations about what improvements will cost and how long repairs may take.
Building a team of local professionals
The next step is to build a team of local real estate professionals who can help you during the process. This includes your real estate agent, property manager, inspector, and attorney. Finding trustworthy and competent people in their respective fields is essential when hiring.
Partnering with a real estate agent
One of the best ways to maximize your time and resources is by partnering with a real estate agent. Finding an agent with experience in your local market who can get you into homes quickly and provides excellent service will save you time and money.
To find a good agent, ask for recommendations from friends or family who have recently bought/sold properties in your area. Look for someone with experience selling homes in your price range.
If possible, try to find an agent focusing on one specific geographic area rather than handling properties all over town. This will ensure they have intimate knowledge of the local market and can provide accurate information about what similar homes are selling for within your target area.
Once you’ve selected an agent with whom you feel comfortable working together, both sides must understand their roles before beginning discussions about listing prices or other issues related to marketing strategy or pricing decisions.
Find a local property manager
A good property manager can be the deciding factor in whether you’re profitable or not. While it’s possible to manage a rental yourself, there are several reasons why it’s often not the best option.
Property management is expensive when you hire someone to do it for you; however, if you don’t have the experience or skillset needed to manage a rental property effectively and efficiently, then it’s best to hire a property manager. Primarily when investing out of state, I don’t recommend trying to manage your property remotely.
Having someone else handle this aspect of the business allows them to dedicate their time exclusively towards finding tenants while keeping your property occupied at all times (which means no vacancy periods).
They know what they are doing! A good local property manager will have years of experience working with investors like yourself who face similar challenges.
Hire a good home inspector
I think it’s safe to say that no one wants to buy a home that’s going to cost them more money in the long run.
That’s why it’s so important to hire a good home inspector when you’re purchasing a home. A good home inspector will go through your new house with a fine-tooth comb and make sure that everything is in working order. They’ll check for leaks, damage, and other issues that could cost you money down the road—and they’ll also make sure that everything is up to code.
An inspection will tell you whether the seller has done any repairs recently and how much longer those repairs will last before they need replacing again. It will also give you an idea of how much money you’ll need to budget each month for maintenance expenses like heating/cooling bills or fix-it projects like replacing broken appliances or leaky faucets.
Tips for choosing a property
Choose a property that is in a good location.
This is important for two main reasons:
It will be easier to rent out and make passive income.
You’ll be able to get more money for the property if you decide to sell it later on.
It’s no secret that some neighborhoods are better than others, so ensure the neighborhood surrounding your rental property has lots of potential tenants willing to pay more than $1000 per month on rent.
You can do this by looking at crime statistics and other data available online or through government agencies like HUD (the Department of Housing and Urban Development).
What is the best way to determine whether or not an area has potential tenants willing to spend more than $1000 per month on rent? Ask someone who lives nearby!
A good rule of thumb when choosing an area is this: find out what kind of people live there already, then look for similar qualities among those people as well as their neighbors in other areas around town – both in terms of income level and employment status (elderly people may require nursing home care; College students might share apartments instead).
Do some research about local employment trends, too. Sometimes certain industries attract specific types of workers (such as warehousing operations attract millennials). This makes them especially attractive to real estate investors since those employees need housing close to where they work.
Check local laws and regulations
The next step is to check local laws and regulations. And, oh ya, local property taxes, too! This may sound like an obvious thing to do, but it’s essential not to overlook this step.
If you’re investing in a rental property that will be used as a primary residence, you’ll not likely have many issues with local law or regulation. The same goes if you invest in a second home that will only be used during certain times of year (e.g., summer).
But suppose your goal is to make money from short-term rentals (renting out a property for less than 30 days at a time). In that case, some additional considerations need attention before moving forward with the purchase or renovation process.
For example, what are the restrictions on how long someone can rent their primary residence? Are there any tax implications related to hosting short-term renters? Are there any zoning or building code issues that might hinder your ability to rent out your unit efficiently and profitably?
These questions should all be answered before purchasing real estate outside of state lines so future headaches can be avoided!
Conclusion
Out-of-state real estate investing is a great way to expand your real estate portfolio, but it’s essential to thoroughly research before making any investment. It’s equally as important to have a local team of professionals on hand at all times, as they can help guide you through buying and selling processes.
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