Many people who invest in real estate will largely focus on investing in their home states. This is especially true for novice investors who are just entering the field. And though you might think of it as the ‘safest play’, your decision to not invest in out-of-state real estate can rob you off potentially highly profitable deals. And if you are someone who is interested in investing in other states, then the below tips will help you understand the various aspects of out-of-state real estate investments.
Firstly, out-of-state investment can be more affordable than investing in your state. And this can essentially allow you to start building your portfolio rather than having to wait until you are in a financial position to invest in your own state.
For example, imagine that you are a resident of New York. According to experts at High Return Real Estate the median value of homes in New York is more than $300,000. However, the median home value in Ohio is only about $130,000. This essentially means that you can buy a home in Ohio for less than half the money you would have to spend in New York.
As such, the monthly mortgage amounts will also be far less for a home in Ohio than a home in New York. Even if your income disqualifies you for a mortgage in New York, you can still be approved for a home in Ohio. Given this huge advantage, why would you not decide to benefit from this more affordable opportunity?
Sometimes, the real estate market of a particular state may be growing faster than your own state. In such a situation, not investing in that state will be a foolhardy decision. For example, suppose that you live in Texas and the economic projections show that employment levels will remain stable for the next ten years. This will mean that the real estate prices are also likely to remain flat or even fall over the decade. And that definitely is not a good opportunity.
Now, if in the same projections, it is shown that North Carolina will see 5% employment growth annually over the next 10 years, then that is an indication that the North Carolina real estate market will perform strongly over the coming decade. As such, investing in North Carolina rather than your home state of Texas should be a logical choice.
A very basic rule of any investment is to not put all your eggs in one basket. What this means is that you should never bet all your money on one single investment. Instead, you must spread it across multiple areas so that even if one area gets hit and you lose, other investments might still turn out a profit and help you offset the loss.
And when it comes to real estate, just focusing on investing in your home state alone is a bad choice. If there is any sudden economic regression in your state, then all your real estate investments will be down. You may not be able to sell the property or may be forced to sell them at a cheap price and suffer a huge loss.
So, try to invest in other states too, especially those which exhibit strong growth potential. By doing so, you will be able to balance your real estate portfolio and make it more risk-free.
Turnkey Real Estate
One of the best ways to invest in out of state properties is through turnkey real estate deals. Since these sellers have already made the necessary repair and renovations, you don’t have to waste time on that.
Similarly, a turnkey property will come with a professional management team that will take care of everything related to the home, whether it is cleaning, maintenance or anything else. As such, you don’t have to be concerned about such trivial things. The only thing you have to do is to invest. And then you can collect the monthly rental payments without any worries.
Finally, make sure that you educate yourself about the various rules and regulations of the state you are investing in. Their procedure of purchasing a property, banking rules, legal requirements etc. can be different when compared to your home state. As such, if you blindly go and look for investment opportunities without knowing about these things, you might likely end up confused and irritated.
And in the worst case scenario, you might even lose money. So, remember to check out the relevant government websites and talk to legal and real estate experts before you decide to purchase any out-of-state property.