Written by Emily Koelsch
Out-of-state investing is an increasingly popular strategy for real estate investors. Property values vary significantly from one state to the next. For investors who live in expensive markets, investing out of state often means a lower entry price and an increased rate of return.
In addition, there are lots of tools available to make it easier to manage rental properties from out of state. This means that investors can still self-manage their properties to further improve returns.
The combination of these factors has made out-of-state investing an increasingly popular choice. That said, it presents some unique risks and challenges for investors. To help you decide if this strategy is right for you, here’s a look at some things you need to consider before investing in out-of-state real estate.
Research is one of the keys to successfully investing in new markets. Before picking a location, you want to do plenty of research to ensure it’s a good option for the short- and long-term. Look at a variety of different data points, including:
Once you’ve found a market that you’re comfortable with, you’ll also want to do a full financial analysis of any properties you’re considering. This should include:
This analysis will give you an estimate of your monthly cash flow and your return on your investment. Doing this analysis is important in all markets, but it’s particularly important when entering a new area or market.
Once you’ve found a market and property you like, the next thing to do is build a local network and team. This should include:
This is the core team you need to purchase and manage a rental property remotely. You can also benefit by having a network of local real estate investors or by connecting with neighbors who can help keep an eye on your property.
Each state has its own Landlord and Tenant laws. These laws can impact how you manage your property. For example, state laws control:
Before entering into a Lease Agreement, Landlords need to be familiar with the laws of the state where their property is located to ensure that they comply with all applicable laws.
Need a Lease Agreement?
A FREE account gets you access to over 200 free forms. Upgrade to a paid account (monthly, annually, or lifetime)
EZLandlord Forms Is Offering 15% 𝙊𝙛𝙛 For New Customers!
We cannot recommend these guys enough!
👉 State Specific Leases 👉 400 Forms to make your landlord-tenant relationship top notch 👉 200 FREE forms for those not ready to purchase 👉 4.8 Rating with over 5000 Reviews 👉 Pro Members get access to ALL leases and forms for $12 per month OR $75 if you purchase the annual membership 👉 YOU CAN BUY LIFETIME FORMS for $399
USE CODE 𝐒𝐓𝐀𝐂𝐈𝐄𝟏𝟓 to get 15% OFF ALL first-time purchases, EVEN THE LIFETIME FORMS!
Out-of-state rental properties can make taxes more complicated for investors. Because you’ll be earning income in a new state, it can impact how you run your business and file taxes. Before investing in a new state, talk with your CPA or tax professional about the tax implications of expanding your portfolio in a new state.
Despite the unique challenges that can come from investing out of state, many investors decide it’s the right choice for them. If you decide to move forward with this strategy, here are some tips to help you get started:
ezLandlordForms is the perfect partner for digital Landlords. We can help with Tenant Screening, Lease creation and signing, and property management forms. We’ve got the tools to help you with every phase of the Landlord lifecycle, whether you invest close to home or across the country.
Did you enjoy this article?
This is an example of what is included on our FREE weekly newsletter, Landlord Weekly.
Subscribers get access to our free forms, email templates, and guides! As well as…
▪️Landlord Tips ▪️ Early Access to Our Blogs ▪️ Landlord Specific Articles by Other Industry Pro’s ▪️ Podcast Links
To check out a sample of our newsletter, click one of the links below👇
By Ryan Squires When setting the rental rate for a rental property or looking…
October 29, 2024Provided by Avail Knowing how to be a good landlord requires extensive knowledge of renting…
October 29, 2024