When I first started out with real estate investing, I was living in an area where the average home listed for around 350k – way more than I was able to afford. I wanted to get into the game but would need to get creative with my strategy if I wanted to make quick progress. In this article I’ll go over how out-of-state investing works and why I’ll probably never see my properties in person. I’ll also counter the typical arguments against remote real estate investing.

Out of state is cheaper

If you’re using a similar strategy to mine and trying to buy single-family homes and rent them out for cashflow, odds are you don’t live in the best markets for this. You really need a home that meets the 1% rule (the monthly rent is at least 1% of the value of the home) to make a good deal. These numbers usually line up best when the home is between 75k-150k. It can be done in the 200-300k range, but tenants with the funds to pay 2000-3000 a month for rent would probably just buy a home instead. This means that cheaper homes can actually make you more money, since you can buy more of them quickly and scale your business.

In expensive markets, people can usually make some money by renting out part of their own home, or buying a duplex and renting half of it. I didn’t do this for a few reasons:

1. I don’t want to interact with tenants. Nothing against them but I want to maintain my privacy, and living with or next door to tenants can create issues.
2. This would require me to own a primary property (which I don’t, I still live in an apartment), and finding a property in my own area is cost-prohibitive.
3. Duplexes are really tough to find. It might be a good way to start out, but the strategy doesn’t scale well.

So that leaves us with buying property either in a different part of our state, or a different state altogether. People get really worried about this. I know several ‘old-school’ real estate investors who would never consider buying a home without seeing it themselves. They have valid concerns, but let me break down how I’ve overcome each of these obstacles. I can’t say that out-of-state investing is completely void of risk. I’ve run into issues myself and made mistakes. But with the right strategy, it’s a powerful way to generate wealth.

Skeletons in the closet

One of the biggest concerns people have with purchasing a property sight-unseen is that the property will be riddled with problems that will come back to bite later. Basically, the lack of due diligence and seeing the property yourself could end up with you missing important details, like water leaks, issues with the foundation, or just noticing that the neighborhood isn’t that great.

It’s true, if you don’t see the property yourself, you have no idea of its condition. This is why your team is absolutely essential. I love to have my real estate agent go to the property and take pictures, as well as a video tour. On top of that, I like getting a second (and third) opinion in the form of my contractor walking the property and assessing it, as well as paying a professional home inspector to give me a thorough breakdown of every potential issue with the home.

Everything comes down to working with the right people. If you get burned, it’s because the people that you relied on either didn’t do their part, or you didn’t communicate well enough and ask the right questions. Finding trustworthy people who have your best interests at heart is the single most important step of your investing journey. I recently formed a new team in Mobile, Alabama, and I have been extremely fortunate to work with amazing people. I can tell someone is good when they are honest with me even if it means less profit on their part. When I made an offer on a home that was in a rough area (I didn’t do proper research and thought the area was fine), my contractor told me his opinion. He also put me in touch with another local investor that he works with who was able to give me advice on the property. The contractor could have easily just said nothing and gotten his $$ for the job, but before we even got started he shared his well-meaning advice. Because of that, I’ll be keeping him as a key member of the team and working with him a lot in the future.

If you can find a good agent and contractor, you should be able to buy any property with confidence. You have your team walk the property and do some due diligence. You do your own research about the area, including property values, market trends, and typical rental rates. With experts helping you, it’s simple to make an educated decision. In some ways, not being there is a blessing. It forces you to rely on professionals who are likely better at noticing certain things than you would be.

No midnight toilet-plunging

A huge obstacle for people getting into real estate is ‘I don’t want to be a landlord’. The idea of answering the phone when things go wrong at the house sounds stressful. You’re essentially always on call, and even if issues don’t arise often, it’s impossible to predict when they might happen. This is why I’m a huge advocate of hiring a property manager. It allows me to spend more time thinking about how to expand my business, and less time worrying about things like leaky pipes and plugged toilets.

A good property manager will do it all – market your property for you, find, screen, and place tenants, keep the property maintained, collect rent, and be the one to answer the phone when something goes wrong. Of course, they aren’t free (usually charging between 8-10% of monthly rent), but for me it’s been well worth the fee. As I continue to scale my business, I’ll rely even more on property managers to help keep everything running smoothly.

Being out of state, it’s actually kind of nice that I don’t even have the opportunity to go check on my properties. It keeps them out-of-sight and out-of-mind. I am currently a full-time student working on a tech startup on the side, and don’t want to spend any more time thinking about my rentals than I need to. I like finding deals, talking with my team, making high-level decisions, and seeing the cash enter my bank account each month. I’m happy to outsource the rest. There is certainly value in managing things yourself, but I don’t think the saved $$ is worth as much as the education. Learning how to do everything is crucial, and honestly this is a step that I should invest more time in. Because I have never self-managed a property, it would be easier for a property manager to take advantage of me or be dishonest. I haven’t run into that issue so far (that I know of), and hope I never do. This highlights the importance of finding a solid property manager so you can sleep at night.

Keep home and work separate

I’ve really enjoyed remotely investing in real estate so far. It comes with certain challenges, but by finding the right team, it’s really not that bad. Plus, it frees up a lot of your time, and can get you access to better deals. Maybe someday I’ll invest in something local, or move to a better market for real estate. But for now, it’s pretty cool to just focus on my day-to-day life and let my investing happen elsewhere. I want to be free at 35, but I’m trying to create my dream lifestyle now.

Do you have any thoughts on the pros and cons of investing out of state? Feel free to comment below.