Being an out-of-state investor has its pros and cons, but there are some clear advantages and reasons why it can be a great strategy. Moreover, understanding the local market is easier than it once was. Thanks to technology, you don’t have to live somewhere to understand market trends, neighborhoods, or rental rates.
Here are some benefits of out of state investing:
In many cases, properties are more affordable in other markets. This is especially true if you invest in a larger city where prices have reached record highs.
By looking outside of your primary market, you may find more affordable options that offer the potential for a better return on investment.
Higher Return on Investment
Partially due to being more affordable, properties in other markets often have a higher return on investment. The lower prices don’t always mean significantly lower rent. The demand for rentals may be higher and lead to a higher return on investment.
Investment strategy is often limited to buy and hold for appreciation in major markets while losing money every month. In other markets, you can find a variety of investment strategies that can be successful.
Room for Appreciation
Appreciation is an important factor to consider when investing in real estate. If you do your research and select a strong market, you may see more appreciation in lesser-known markets than where you live. These markets may be recovering from a downturn or experiencing rapid growth due to new industries moving in.
Whatever the reason for growth, investing in these markets now could lead to substantial profits down the line.
Another benefit of out-of-state investing is that it helps to diversify your portfolio. Risk is a factor that you can’t escape when investing, but you can do things to mitigate how much risk you take. By investing in multiple markets, you are less likely to experience a loss if one market experiences a downturn.
Some states are simply more investor-friendly than others. This is because they have policies in place that make it easier to buy, sell, and rent properties. As an out-of-state investor, you may be able to take advantage of these policies and use them to your benefit.
A good example of this is rent control. Some states have stringent rent control policies, making it difficult for investors to profit from their rentals. But, in other states, there may be no rent control laws or more lenient rent control laws. This means that you can charge higher rents and potentially see a higher return on investment.
Overall, there are many benefits to out-of-state investing. It can be more affordable, offer a higher return on investment, provides more room for appreciation diversify your portfolio, and allow you to take advantage of investor-friendly policies. If you are thinking about investing in real estate, consider looking outside of your immediate market. If you don’t know where to start looking, let us know. We are happy to help anyone find great markets, agents, and teams to work with.